High income != developed. There are different metrics.
Overall GDP very high, GDP PPP per capita middling, incomes highly disparate, etc. Developing status becomes kinda subjective and this particular move is not insane. Sadly it's unlike many many other moves.
USA NGDP per capita 2024: US$86,600, just below Norway.
China NGDP per capita 2024: US$13,000, just below Malaysia.
Their economy is large because there are more of them. That doesn't do anything for their income.