Developmental dyslexia (DD) is a common reading disorder with neurological underpinnings, yet its spectral power and network topology abnormalities in Chinese DD remain unclear. This study investigates these abnormalities in Hong Kong Chinese children with DD using electroencephalography (EEG) data collected during resting states and a one-back Chinese-Korean character reading task. EEG recordings from 85 children with DD and 51 typically developing (TD) peers (aged 7–11) were analyzed using Fast Fourier Transform (FFT) for spectral power and minimum spanning tree (MST) metrics for brain topology. Children with DD exhibited significantly reduced alpha power in both resting and task states, suggesting impaired inhibitory control and cortical hyperactivation, which may contribute to cognitive deficits in DD. This widespread alpha power reduction, observed across multiple scalp areas in both resting and task states, underscores its potential as a neural biomarker for DD. Additionally, a less integrated resting-state beta band network topology was observed, reflecting disrupted large-scale connectivity in children with DD. Enhanced alpha band network integration during task performance, however, may indicate compensatory mechanisms engaged during cognitive challenges. Language familiarity modulated neural responses, with higher alpha and beta power during familiar Chinese stimuli, suggesting more efficient and automatic processing. Lower beta band network integration indicated reduced cognitive effort needed to process familiar Chinese stimuli. Correlation results suggest that a more integrated beta band network during rest is associated with better Chinese word reading fluency in children with DD. These findings provide key insights into spectral and topological markers of Chinese DD, offering a comprehensive view of brain activity and network abnormalities in Chinese children with DD, emphasizing the potential of alpha power as a stable neural biomarker and highlighting language familiarity’s role in modulating brain activity and network organization.