Interesting. I can't see anyone bothering just for target rifle purposes, but maybe it was a military project with a view to quick reloading and accuracy for sniping purposes.
The sight & charger bridge and bolt release are obviously inspired by the Ross MkIII, even the left side receiver wall. The Chinese got quite a few Ross MkIIIs via Morris Cohen between the wars.
Perhaps the Chinese were impressed with the Ross and decided to try and combine the speed and accuracy with the M-N magazine and feed. It would make sense from their perspective.
Or was it a competition or biathlon rifle inspired by the modified Ross MkIIIs that the Soviets used in the 1950s in the running deer competitions? No provision for a scope so maybe it was more for competition than military use.
Unless of course the receiver profile is the same as the hex on the early M-Ns, in which case they could have used the Soviet PE mount bases?
The real question is, how the heck did it ever get out of China!?