23 Trillion Dollars Vanished… And the Chinese People Are Done Waiting | Digging into China

Hi, I'm Dong Seong. Welcome to Digging into China, where we take a deep dive into what's really happening in China and share some unique insights. Lately, the fire of protest in Iran has been spreading faster and hotter than anyone expected. The wave has now swept the entire country, and the speed is honestly breathtaking. This whole movement only kicked off at the end of December. But we are talking barely 2 weeks. And already members of the revolutionary guard and the regular police are peeling off their uniforms and joining the crowds in the streets. At this point, you can pretty much say the Iranian theocratic regime has one foot in the coffin. According to British media reports, even Supreme Leader Camone is keeping his escape bag packed, ready to bolt to Moscow for asylum at any moment. Now if this theoccratic government in Iran actually collapses this time, it carries a huge lessons for China because Iranian clerical regime and the Chinese communist regime are aery similar in ideology, propaganda methods and organizational structure. You could say the CCP is the East Asian version of the theocrats or Iran is simply the Middle Eastern version of the CCP. Only one wears black robes and the other wears a cajer jackets, shortsleeved black robe, if you will. So today, let's have a serious chat. When will China get its own Iran moment? First, let's look at the structural differences between these two societies. Even after 40 years of relentless suppression by the theocrats, Iranian society still maintains a very strong intermediate social structure. And at the very heart of that structure sits the bizarre merchants. Throughout Iranian history, aside from the monarchy, the clergy, and intellectuals, the bizaar merchants have been the fourth major force shaping the country's destiny. Their political participation has been one of the most striking features of modern Iranian social and political movements. Look at the scale of their market shutdowns. These aren't thousands of individuals randomly deciding to close shops on the same day. This is a coordinated collective action achieved rapidly through tight action networks. You can say the bazaar merchants community functions as a single collective will from the perspective of signaling. What this group sends to the whole of Iranian society is a synchronized message. The legitimacy of Kimon's theocratic regime is gone. And that signal has tremendous crossclass penetrating power because it physically holds economic circulation. On top of that, through religious donations and long-standing economic ties, the bizarre merchants maintain traditional links with the clerical class. Even though the current protests carry a very strong anti-clerical flavor, the bizarre merchants ability to mobilize physical spaces and social networks has not weakened at all. What do they provide? They provide a platform for information exchange and resource allocation that exists completely outside the state control. Now compare that with China. Over the past few decades, the CCP has systematically dismantled China's original social structure, eliminating and persecuting large numbers of the social backbone groups. That's how they built a highly atomized society and then imposed the blanket surveillance through the so-called grid management system. As a result, China lacks anything like Iran's bazaar. No independent political group with that kind of weight. No guildlike organizations, small businesses and individual operators have almost no horizontal connections among themselves. That makes coordination costs skyhigh. And under the CCP's suffocating level of monitoring, any attempt to build cross regional or crossindustry alliances gets snuffed out almost immediately. But here's the thing. This same strategy has created one gigantic systemic vulnerability for the CCP. Their divide and control approach can only contain highly organized events. The moment the people start the spontaneous bottom up movement, the entire so-called social governance system crashes instantly. That's the huge difference. Iranian protests spread like a spiderweb expanding ring by ring with some internal logic. Even in the midst of chaos, potential unrest in China would look completely different. It would be a simultaneous detonation of thousands of isolated high pressure flash points all exploding at once. Iran at least has the bizarre merchants acting as a kind of social shock absorber. Though right now they are clearly acting as an amplifier instead. China has only rigid grits. That means to ignite the nationwide protests here, the economic pain has to become both extreme and universal at the same time. Painful enough to punch through tens of thousands of these physical isolation grids simultaneously. That kind of condition used to seem pretty hard to achieve, but the CCP never disappoints us. Right now, they are working very hard, very actively to make it happen. And how are they doing it? Through something I call the deflation tax. And this deflation tax is gradually taking on a universal character. People tend to think inflation is a scary, but deflation is just as terrifying because both inflation and deflation erode people's purchasing power. In Iran, the economic trigger for the protest is runaway inflation. For ordinary Iranians, poverty hits them every single day. They felt it instantly in currency exchange rates and purchasing power. In just 10 years, from 30,000 real to $1 in 2015 to 1 and a half million real to $1 today. The currency has basically been wiped out. That depreciation speed transmits straight to the checkout counter. In 2025, food prices in rent jumped 72% year on year. Medical costs rose 50%. The CCP is doing exactly the same thing to its people. Systemic plunder of purchasing power. The only difference is Iran does it openly through hyperinflation robbery while the CCP does it quietly through deflation plus administrative cost shifting. Chinese families are suffering a more hidden but equally lethal form of wealth robbery. We can measure this through three main factors. In Iran, people are getting poorer because money is worthless. In China, people are getting poorer because assets are worthless. For the household balance sheets, the end result is identical. Roughly 70% of Chinese household wealth is locked in real estate. Since the peak, property prices have dropped about 50%. Right now, real estate has basically lost all liquidity and its value as collateral in finance has almost disappeared too. Just in 2024, the loss to the household sector from real estate was already around 18 trillion US. If you include the price declines from the year before, total losses have exceeded $23 trillion. Think about the purchasing power conversions. A middle-class Chinese family sees their property value drop from 5 million yen to 3 million. That 2 million loss, even though it hasn't been cashed out, immediately suppresses consumption through the negative wealth effect. Psychologically, it screams the last few decades were for nothing. The second vector, the CCP's completely unrestrained administrative looting. The real estate crisis devastated household assets, but it direct wrecked local government finances even worse. Land sales revenue, the lifeblood of local governments, has collapsed. In 2021, it was 8.7 trillion yen. By 2025, it's down to 3 trillion. And what do we see next? Local governments are going berserk overnight, rewriting electric vehicle regulations on the fly, inventing new fines left and right, even in the first tier city like a Shenzhen. They recently called delivery riders to training sessions, then had the police confiscate their ebikes on the spot without word. Some places collected a store fees from vendors, then pretended nothing happened and demanded more money. Others just stop riders in the middle of the road and take their vehicles. All done by police. You notice the pattern? They always pick on the weakest groups. The CCP really is a pack of heartless bastard when it comes to bullying the powerless. But the second they meet anyone who isn't afraid of them, they turn into cowards. Remember that foreign ministry spokesperson who got completely shut down by a Japanese reporter? The reporter basically asked, "You Chinese always brag about awesome uh how awesome your weapons are, so why didn't your weapon make a single sound in Venezuela before disappearing completely?" The spokesperson literally couldn't get a word out for 49 seconds. Total freeze up. Pure silence. Great at bullying the weak. Completely lost when facing people who don't fear them. Third vector, rigid living cost increases plus the social security black hole. Consumer goods are in deflation, but the government monopoly basic services are skyrocketing, creating this bizarre scissors gap where CPI goes down, but actual living costs go up. Most normal countries have never seen anything like it. I looked at at the water, electricity, and the gas prices increases between 2024 and 2025. In first tier cities like Guangjo, Shanghai, Shenzhen and many major second tier cities, water prices rose 10% to 50%. Gas 5% to 20%. The most evil part, not just the price hikes. They temper with the meters. Water meters, gas meters, electricity meters in people's home keep running even when nobody's there. That means every Chinese person's real living cost keeps climbing no matter what. Now the social security contribution base has broken all records which effectively means every Chinese person's income is decreasing every year. They've been raising the base twice a year extending retirement age all of it. What is this? a plan to make people work until they drop dead so the party doesn't have to pay pensions. In this economic environment, blindly jacking up contribution basis only raises business labor costs and the resulting unemployment and the social costs will far exceed whatever extra social security money they collect. Let me do a quick sidebyside comparison of typical middle-class families in China and Iran. So you can see it clearly in Iran in 2025 nominal inflation is 50%. Weighted food and medical inflation 15%. Wage growth lags by 15%. Direct purchasing power loss equals 65% inflation minus 15% wage growth equals to 50% loss. Conclusion. Today an Iranian family can buy only half the basic survival goods they could last year. Now, China wages are in deflation across the board. White collar, civil servants, everyone face a 10 to 30% pay cuts or vanished bonuses. Let's take the medium negative 15%. Add asset deflation effect. Assume a 30% real estate drops creates a psychological consumption squeeze equivalent to 5% of the loss. I'm using a very conservative model here already giving the CCP a big discount. That alone suppresses consumption propensity by 10 to 16%. Then added a hidden looting, water, electricity hikes plus administrative fines, eating another 5% of disposable income. Then at unemployment risk premium even using official youth unemployment at 18% plus layoff panic households increase precautionary savings cutting spendable money by another 10%. Total effective loss of economic security wage drop 15% plus asset effect 10% plus hidden inflation 5% plus risk premium 10% equals 40%. So even though one is inflation and one is deflation, the economic pain index felt by China's middle class is actually on the same order of magnitude as what Iranians feel from their real collapse. The only difference is the form the suffering takes. In Iran, it's acute bleeding out pain which produces high intensity resistance. In China, it's a severe internal bleeding leading to weakness, even paralysis. Iranians spend frantically because money is worthless, creating an inflation spiral. Chinese people have no money and assets are shrinking fast. So, they cut back hard, creating a deflation spiral. You can see this confirmed in tiny everyday details. Ride hailing drivers say you they used to earn the money in 8 hours now takes 14 and they still might lose. Delivery riders face a stricter time requirements and longer hours yet income keeps dropping. High unemployment silently drags down every employed person's wage. Some might say economic indicators lack but social mood always leads. How people interpret their own economic pain decides whether they resist or lie flat. From social media sentiments analysis, the shift in China is crystal clear. 2023 and even most of 2024 will still lie flat the passive resistance. But by the second half of 2025, whether on Chinese Tik Tok or Billy Billy, politically edgy videos exploded. They talk about the former Soviet Union, Eastern Europe, Iran. But every sentence is obviously pointing straight at the CCP and a video or article where the party brags. Open the comment section if you dare. Negative comments are impossible to delete fast enough. Even the live flat crowd can't stay lying down anymore. The resentment is overflowing your screen. Compare the mood trajectories. Iran is a high energy, high risk anger externalized straight into social explosion. China is moving from low energy to high despair. From internalized anger to outward expression given China's social structure, the final direction is social implosion. And under the right conditions, implosion will ev inevitably turn into explosion. Chinese public psychology has gone from life flat veiled sarcasm openly cursing the CCP. The tipping point is when the bare minimum of survival is broken or when the stability mannance machine itself breaks down. A lot of successful protests aren't just about how angry the people are. It's about whether the violence apparatus is still willing to obey orders. That's the common trend we are seeing in both countries right now. In this round of Iranian protests, both regular police and the revolutionary guard soldiers have started to defect or stand down. Most rank and file police and guards are conscripts or career cops paid in rapidly deving Rios. They live in the same hyperinflation hell. Can't afford the bread either. I tell you, dictators around the world really do share the same brain. Iran also has tiered income. The senior officers in the revolutionary guard controls huge business empires and oil smuggling networks. They get paid in dollars plus privileges. The vast majority of ordinary soldiers get the depreciating real. Videos show it clearly. In many protest areas, security forces simply back off or enforce lazily when facing crowds. Once police realize they too are victims, their will to suppress evaporates. China's high pressure surveillance relies on a massive army of auxiliary police and grid workers. Basically, a labor intensive stability maintenance model. For these people, it's just a job. If they if the pay comes, they show loyalty for a day. If they pay stops, the CCP can go to hell. Unlike the PLA and armed police who are centrally funded, these millions of auxiliary cops, assistant officers, and a grid staff are paid by local budgets, two or 3,000 yen a month at the best. In 2025, we are already seeing auxiliary police, bus drivers, sanitation workers, even low-level civil servants getting wage aras or months or 30% pay cuts. Some places are openly talking about the guaranteeing six month pay, fighting for 9 month pay for your four-year service. That's how rotten it has become. The economic decay in 2025 is accelerating downward now reaching uniformed medical staff, auxiliary police, even veterans. The grassroots stability manage force has become highly mercenary. Their job includes handling the task most likely to provoke public anger. Basically paid to carry the party's dirty work. When something goes wrong, blame the temporary workers. They have zero loyalty to the party, only to the paycheck. If local governments desperate to fill fiscal holes, order these auxiliary forces to ramp up enforcement and fines while simultaneously delaying their wages. You get a perfect suicidal loop. The government angers the people while simultaneously disarming itself. Right now, China has the feel widespread economic pain and lose screws unstable grassroots enforcement, but still missing two key ignition devices. First, connection points. Iran has the bizarre merchants as a natural horizontal network. China has none. It's a highly atomized society. That means discontent can't resonate horizontally. Homeowners care only about unfinished buildings. Wage claimments only about the back pay. This is the compartmentalization effect and it's the CCP's strongest stability firewall. Second, China still lacks a strong enough catalyst. Iran's catalyst was a sudden currency collapse and instantaneous universal morally unacceptable shock. China's pen is a chronic slow knife cuts, gradual deflation and unemployment, giving people the illusion of boiling frog. To ignite nationwide protest, you need something sudden, universal, and morally intolerable. If an Iran moment happens in China, it will not be a simple copy of Iran's model. I think it will most likely follows this path. what I call the Chinese characteristic protest trajectory. Stage one, fiscal meltdown. Very likely some third tier cities like a Hang or Zuni declare fiscal restructuring, stop paying civil servants and auxiliary police wages or delay payments for over 6 months. Public services immediately collapse. Buses stop. Garbage piles up. We are already seeing pieces of this. Winter heating cuts in rural Herb Bay because no money for gas also happening. Stage two, predatory rebound. To pay wages, local governments go extreme, jack up public utility prices even more, fake meter readings send urban enforcers and auxiliary police on mad fine collection sprees. This is a pure survival robbery. It directly ignites small vendors and bottom tier people. Stage three, stability vacuum plus digital wildfire. At this point, the trigger becomes highly random. Nobody knows exactly how it starts. Maybe a disappearance, a food safety scandal, a brutal enforcement death of a vulnerable person. The emotional tinder is already laid. It just needs a spark. People surround and overwhelm enforcers. Auxiliary police who haven't been paid for half a year. The party security contractors most likely refuse orders. You can already imagine the banner. You owe me 2 or 3,000 a month and you want me to risk my life. Videos of that scene will break through censorship instantly, triggering nationwide empathy over living costs and government incompetence. As unemployment rises and the protests multiply, stability maintenance costs grow exponentially while fiscal capacity shrinks linearly due to real estate collapse and tax base erosion. When maintenance cost is greater than fiscal capacity, thus the system's critical point. Given the speed of local fiscal deterioration and rising social pressure, some inland provinces have already crossed that line. Nationally, at the latest by mid 2027, we enter high risk territory. What Iran is is experiencing is a violent revolution detonated by currency collapse and rapidly spread through traditional networks, bazaar and mosques. What China is experiencing is a chronic social disintegration triggered by balance sheet decay temporarily contained by atomized structure. But pressure internal or external never disappears into thin air. The entire CCP regime structure rests on this huge expensive fragile inefficient auxiliary police and the stability apparatus. When the pain of hidden looting exceeds what people can endure, and when local governments go even crazier with visible looting like a fines and social security grabs, China will inevitably meets its Iran moment. This is not some random historical sideshow. This is the turning point where Chinese history is about to violently restart. Thank you so much for watching. 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