Legally (according to their constitution) USSR was also a democracy. But that hardly meant much in practice. Of course the Chinese society is probably much "freer" than than the Soviet one was prior to Gorbachev's reforms but again.. an extremely low standard.
Brunei isn't on the Bertelsmann because it is small (<1 million people), not because of its political structure.
The EDI explicitly does not try to asses whether a country is democratic or not, but just allows relative comparisons. It also doesn't include smaller countries but doesn't have as clear of a cutoff.
If you are going to use inclusion on one or more of these lists as an argument, you'll have actually cite where those lists use status as a democracy as a criteria for inclusion and how that is assessed.
China has a fig leaf of a democracy. It meets the simplest definition of a democracy, the citizens do get to vote on something. Compared to most of the developed world, it's a far cry from a liberal democracy that allows for dissenting positions and parties. China's flavor of governing is objectively neither good nor bad (they have managed to become a superpower after all) but it's nothing like the democracies of the West.
Because China is a democracy and Brunei is not a democracy.