I would check out everything LordEvil has listed so far as your culprit. Not sure how experienced you are with the M-14 or how many rounds of both types you have fired to base your conclusion,..so therefore I will remind you to make sure you don't unknowingly ride your support hand on your op rod during firing.
From my experience with the green box 762X51 ammo, it was bang on 762NATO velocity when chronied by me, and cycled my fine for many hundred of rounds in mine.
It is a little curious however,... that you said commercial .308 cycled properly. Was it 150 gr 308? 165gr 308? 180gr 308? And how many rounds for a comparison? You know that any of the problems Lord Evil has listed to check for, may have been overcome with 308 ammo of heavier bullet weights 168-180, but in properly working M-14's, add extra stress to the operating system and cause premature wear and tear.
To be 100% objective here, even though this Norinco ammo was delivering velocity in my 22" bbl right on NATO specs, it doesn't mean it's getting it done with the right powder burn rate and therefore giving proper 762NATO gas impulses for your M-14's operating system to work at it's best.
I'm sure there is a million rounds of this through Chinese M-14s by now however in Canada, and there hasn't been any short stroking complaints I've had or read.
