First/second/third world is not an economic concept. Both Namibia and the Philippines are first world countries. Both Switzerland and Sweden (and Austria too) are third world countries. China -- by the very definition of the first/second/third world -- is a second world country.
Please use the proper terms: developed and developing.
They have about 900 million people living on $7 or less per day. Half a billion people there are living on $3-$4 or less per day. Of the poorest two billion people on earth, more than 1/3 are in China. Their income numbers for the bottom 50% compare with the poorest nations on earth.
Granted, the problem with China is it possesses the most inequality of any major nation between the top 50% and the bottom 50%, due to the vast rural vs east coast gap in incomes. The nation with the second most billionaires, that has half a billion people living as subsistence farmers.