"developing" in this sense usually refers more to GDP per capita and other measures. China is the world's largest economy, but even in Purchasing Power Parity terms it's 75th (on a per capita basis), similar to places like Mexico and Thailand. In many measures a Chinese person living in Shanghai lives a life that is almost indistinguishable from say an American in New York City, but there are a lot of much poorer places in China that have a long way to go before they're "developed."