China has been copying foriegn weapons for decades. In case you forgot, thier modern arms industry got its start copying Russian weapons. Norinco made a A1/SP1 clone/hybrid for civilian sale, though rare in the US they are more common in Canada though still obscure. In addition to the M16 and AK, China has copied nearly ever major succesful military/civilian weapon for any number of reasons.
The primary reason to make copies of the M4, besides export sales, would be to arm "reserve units". China's regular army isn't that much bigger than ours, if anything its the same but there could be an "imbalance" if you could quantify all of thier "reserve" troops, which are plentiful. Much like Russia, China never throws anything away. Expect mildly trained civilians to be driving around in T55's and causing trouble for supply lines and busying valuable air assets. These civilian conscripts*most with no training, and some not even being male* will be armed with anything from Thompson SMG's to DShk MG's or M4geries. Russia prepared gazillions of rounds of 5.56 rounds to use against NATO, expecting thier strategic resources to be literally "nuked". At some point, they would run out of ammo, especially if they are loosing. It only makes sense to use our weapons/ammo against us....yet another Nazi innovation. China is taking it one step farther, with a looming conflict with the US over Taiwan they better pack a lunch. Expect Chinese soldiers to impersenate Taiwanese soldiers, right down to the weapons to gain advantage....again, just like the Nazis at the "Bulge". There is nothing new about China copying the M16 or anyother military weapon for profit/military use. Personally, Im not sure why they would bother as they are about 5-8 years ahead of us in the small arms arena...except that they test with soap.
China is a very serious threat to the US. Despite our emerging relations*which are 99% private* Chna has openly threatened to go to war with the USA over Taiwan. Much like India/Pakistan, N/S Korea and Iran/Israel, China/Taiwan is a conflict that is coming, they have promised it. We have sent a carrier group there twice during hostilites between China/Taiwan. If China makes a move, we will be at war with China, and its American resolve that has prevented this from happening. Right now, people seem to think we are stretched to thin and can't protect ourselves and our enemies are coming out of the woodwork, so who knows....they may be feeling lucky. Lucky or not, they know an open war with America would be the end of at least one of the nations, if not both.
Scary days ahead, friends....