If true, it'd signal a wise move on the part of Chinese defense ministry and PLAAF. Maybe they've realized it's better to use the money for more J20 than to split the funds between J20 and something last-gen, such as J11D.
Perhaps project was started years ago under different management, back when things weren't so clear on J20's success, or perhaps back when SAC had more clout with Chinese govt., so projects were also given to them just for political reasons, to keep them alive.
Various subsystems made for J11D could and should still find their way to upgraded Flankers, of course.
And SAC itself, even if it's not successful at winning some orders for any of their newly designed products, should be given production rights of some other projects, be their CAC's or XAC's. Imagine J10B, for example, being built both at CAC and SAC simultaneously.