In a real shooting war available fuel and food supplies would be directed to the PLAAF and the PLAN. Trade would dry up, meaning factories making cheap consumer goods for export would be shut down. So, now you have a large urban population with no work, no food and no fuel.
Yes, it is less true today.
I think the Chinese leadership does in fact fear it’s people. Their people are getting way ahead of their ability to control them.
If you, were a tried and true communist, and you started losing control of your populace, how would you restore your authority?
Economics be damned. That’s not important right now.
Protests?
First order of business would be complete isolation from the outside world. The protests and crackdown never happened if no one sees them.
This could be a tipping point.
Can the Chinese leaders put the genie back in the bottle?
If they don’t, they will have presided over their own demise.
For the hard liners it becomes a test of their mettle. A test of their willingness to do whatever it takes to maintain the supremacy of the state.
Remember the video of Saddam Hussein calling out “Traitors” to be executed? Recall how quickly he found support.