Depends on what you mean by "collapsed." A USSR-like collapse, where both the communist system and the political union fall apart was very unlikely. Obviously, there is a great deal of ethnic diversity within China, but there is very little recent precedence for those ethnicities independently ruling themselves.

Were there a collapse, it would have been of the communist political system. China was already liberalizing its economy in the late 1980s, so the key difference would be democratization. In order for this to happen, you'd either need to see the communist government voluntarily give up power or extensive protests across a country of 1.5 billion people that force it to give up power. Keep in mind that China wasn't nearly as urbanized back in the 1980s as it is today, so mass protests would have been difficult.

I think a transition to democracy would be a much likelier scenario. Liberal-minded communists would need to assume control of the party. Eventually, you'd see liberal parties dominate the cities, where factory workers would demand protections and rights, and the communist party enjoying strong support in rural areas and among the elderly. As China urbanized, the communist party's power would deteriorate. A Chinese democracy would be very hectic (think India) and authoritarian at first (think post-Soviet Russia).

In the international arena, China wouldn't be as aggressive in its foreign policy as it is today, since there would be less consensus. The fate of North Korea is frightening to think about. If a liberal party came into power, they'd likely cut off support to the totalitarian regime, causing North Korea to lash out. The Kim dynasty could be overthrown in a coup by disaffected members of the military or wage a last-ditch war against South Korea.