1) The Qing certainly was culturally and financially developed, BUT not particularly more so compared with contemporary Mughals or Ottomans - and the latter similarly did not fare too well. I think framing the question like that underestimates the sheer economic and social upheaval that the intrusion of industrialism causes to traditional societies and governance.
Using one example from the Qing: Qing local governance post-Taiping was financed through the li-kin or 'internal tariff', a consequence of the Qing losing tariff autonomy after the Opium Wars. A large portion of these tariffs came from internal waterways, notably the Grand Canal. BUT starting in the 1860s, the arrival of seagoing ships, the expansion of the Treaty Port network into the Yangtze Basin (which paid no likin), and finally the expansion of rail and telegraph posed a fatal challenge to this traditional economic system. As canal freight dried up, the economies built around them fell, compounding the loss of provincial revenue. The result was massive societal change in a short period of time and with no historical precedent on how to deal with it. The consequence was administrative and societal decay, leading to anti-Western movements and provincial autonomy by the 1900s.
A key dynamic of such 'industrial shock' is the slow leeching of power away from the center and towards the periphery. As industrialism remakes economic and social systems, the distribution of power amongst regions changes, government policies start to become out of sync with power realities on the ground, leading to administrative decay. The traditionally landward orientation of the Qing, for example, could not adjust fast enough to the new reality of a wealthier and globally-connected coastal Southern China (particularly distant Guangdong, whose overseas emigrants brought back reformist and later revolutionary ideas).
Neither of these dynamics are unique to the Qing: the late-19thC Ottoman upheavals can be partly attributed to the wrecking of the Levantine textile industry thanks to free trade with Britain, and the Mughals collapsed as increased volumes of European trade shifted power away from the traditional Delhi heartland to the Marathi and Bengali peripheries.
2) Given the above, it's possible to overstate the case for Qing "failure". Throughout the "Tongzhi Restoration" of the 1860s (Self-Strengthening Movement), Westerners were particularly impressed by how the Qing saved itself from near-destruction during the Taiping, Nien, Dungan and Panthay revolts (among others), as well as how quickly its diplomatic corps (Zongli Yamen) inserted itself into diplomatic affairs (particularly with regards to asserting its rights in Korea). The military strength of the Qing during the 1880s and the early 1890s was considered formidable: Russia after the 1881 Ili Crisis constantly fretted about a Qing reconquest of Outer Manchuria, and on the eve of the Sino-Japanese War the Qing had the 8th largest fleet in the world (even after the French destroyed the Nanyang Fleet). I think it was in [Edit: Quest for Power - European Imperialism and the Making of Chinese Statecraft] that said that the only reason why Japan is a "success" and Qing was a "failure" was because Japan won in 1895. And even that conflict was much closer than imagined - Japan's forex and logistics issues were coming sharply to the fore by the time of peace, and a more steady Qing court might have actually limited the physical losses with a scorched-earth policy. (Japan would continue to experience such issues in war right until Pearl Harbor).
Here are some of the achievements of the Qing during the 1860s-1890s:
a) establishing arsenals at Fuzhou and Shanghai, not only arms centers but experiments with heavy industry, industrial mining and later, railroads and telegraphs;
b) building up a diplomatic corps + vocabulary from scratch and successfully negotiating with foreign powers within several years over Korea, Turkestan, Manchuria, Treaty Rights etc etc.
c) building up Western-style economic corporations from scratch and successfully regaining economic control of inland waterways through the China Merchants Steam Navigation Company;
d) importing an impressive amount of ordnance (several hundred thousand rifles in Manchuria alone by 1880s) and building up Asia's largest navy;
e) and of course, doing all this while retaining enough support NOT just with the traditional Han Confucian elite, BUT also with the Mongols, Tibetans, Manchus etc etc.
3) That said, there are clear bureaucratic missteps that the Qing made in its reform effort compared with Japan. Li Hongzhang, the premier statesman in China pushing for reform, was only ever Commissioner for the Northern Ports (there was no chancellor or PM in the Qing until the 1900s), which meant that all of his reform efforts were conducted through informal channels of power (his influence, his ability to insert "Huai" faction people into power, and ultimately his ability to retain favor with Empress Dowager Cixi). Li Hongzhang was never in the center of power in Beijing, but instead issued his orders from Tianjin. His direct influence was only relevant in the coastal provinces of Northern China: he had to rely on allies in the Commissioner for the Southern Ports (which he got until the 1870s) and in the inland provinces (which he never got nor cared about). Li's initiatives were therefore impressive, but piecemeal, provincial and highly dependent on his personal views. Li never paid much attention to military training and "software", a key Qing failure in the Sino-Japanese War. They also inevitably contributed to provincial autonomy.
This also meant that unlike Japan, the Qing did not have a Hirobumi-like figure or genro-like faction that could implement nationwide reforms (even assuming they had the resources to). The equivalent of the genro in Qing China, the Grand Council, was comprised of highly-conservative Manchu elites (though with the occasional semi-reformer like Ronglu or Prince Gong), a consequence of the pre-industrial strength of China's monarchy compared with Japan's. This in turn led to the failure of the Qing, until the Late Qing Reform of the 1900s, to establish centralized agencies for education, security, government-business cooperation and other basic functions that Japan had already adopted early in the Meiji Reforms, which meant that by the 1890s, Japan could harness a far larger proportion of its resources compared with the Qing.
