They are betting on an implosion. No one wants to go down with a sinking overlord no matter how overpowering
They won't implode. Even if the real estate bubble bursts, they will just see a massive correction and perhaps some stagnation before finding new areas of growth. Most of the lower middle class will become poor, but that will become their new start point. Other countries decoupling from China will also reduce the impact on their own economies.
Only the upper middle class and rich are necessary to remain competitive in the marketplace. That's about 300-400 million people. Lower middle class and the poor are irrelevant, even the jobs they do will easily be replaced by AI.