I think J-16 has a lot of potential in its future to fill in the gap between Sino-Flankers and J-20s. It'll take probably around a couple of decades for the PLAAF to have a decent large amount of J-20s to replace the entire Sino-Flanker fleet. J-16D would nicely fit in with the niche role of EW and SEAD, while an MLU for the J-11B/BS using components from J-16 and J-11D would actually be great for extending their usefulness into the future. If possible, an MLU for J-16 could be possible if the PLAAF was to make the choice of having the J-16 serve right into the far future instead (since J-16 is still a new model).
If SAC no longer participates in the fighter business, then CAC would surely have a monopoly over that field. That would be bad since a monopoly in the fighter business means no competition for CAC, and without competitiveness this means less innovation within CAC as well. In the event that the FC-31 actually has no future in the PLA, what SAC could simply do is apply MLU on J-11B/BS and J-16, while also giving themselves a head-start over CAC in developing a 6th-gen. fighter jet. If SAC can't secure its position in Chinese 5th-gen. fighters then maybe jumping on to the next generation could help (but that's implying if SAC continues to participate in the fighter business by the far future of course).
