The social volcano thesis states that the rising inequality in China threatens regime stability. This idea, although widely held in the media and in academia, is backed by little positive evidence but by much negative evidence. Two primary pieces of negative evidence are that the Chinese people trust the central government and that they are highly tolerant of inequality. This paper discusses the shortcomings of the negative evidence and re-examines the thesis in a rigorous and direct way. Our multilevel analysis shows that provincial inequality has negative effects on individuals’ trust in the local government but not in the central government, and this negative effect holds for both the rich and the poor. Because distrust in the local government implies distrust in the central government, we conclude that a social volcano exists.
