vscode cannot fold xml file correctly for special multi-lines element

[bz-wow]

Issue Type: Bug

vscode doesn't fold the following xml correctly:

<div>
<p>line1
line2
</p>
</div>

The above 'p' element has 2 lines, the 2nd line doesn't have space before the content. When fold the 'div' element, vscode shows incorrectly.

VS Code version: Code 1.55.0 (c185983, 2021-03-30T16:01:55.261Z)
OS version: Windows_NT x64 10.0.19042

System Info

Item	Value
CPUs	Intel(R) Core(TM) i5-4570 CPU @ 3.20GHz (4 x 3193)
GPU Status	2d_canvas: enabled gpu_compositing: enabled multiple_raster_threads: enabled_on oop_rasterization: enabled opengl: enabled_on protected_video_decode: unavailable_off rasterization: enabled skia_renderer: enabled_on video_decode: enabled vulkan: disabled_off webgl: enabled webgl2: enabled
Load (avg)	undefined
Memory (System)	11.80GB (4.39GB free)
Process Argv	. --crash-reporter-id bbbf0b3b-5669-43ef-a693-95e933c433fd
Screen Reader	no
VM	0%

Extensions (5)

Extension	Author (truncated)	Version
xml	Dot	2.5.1
githd	hui	2.2.4
csharp	ms-	1.23.9
uuid-generator	net	0.0.4
vscode-nuget-gallery	pat	0.0.24

A/B Experiments

vsins829:30139715
vsliv368cf:30146710
vsreu685:30147344
vspor879:30202332
vspor708:30202333
vspor363:30204092
pythonvspyt875:30259475
vspre833:30267464
vshan820:30276952

[vscodebot]

(Experimental duplicate detection)
Thanks for submitting this issue. Please also check if it is already covered by an existing one, like:

• [folding] Folding HTML tags should hide the closing tag. (#24515)

[aeschli]

The built-in basic XML language support only supports indentation-based folding. A folding region starts when a line has a smaller indent than one or more following lines, and ends when there is a line with the same or smaller indent.

To get language aware folding, install a XML extension like https://marketplace.visualstudio.com/items?itemName=redhat.vscode-xml