I think the key metric to watch for is maintainability for J-16 compared with fifth gen/UCAV. If cost/maintenance per hour for J-20S is competitive with that of the J-16, there is no reason the former couldn’t fulfill the same role with external carry.
Expecting maintainability as advantage for flanker IMHO is a tall order. Flanker is forever bound to be a ladder queen.
J-16 ultimately was produced for a decade together with J-20, whatever it does over J-20 can't be explained just by Shenyang pork, nor by need to fill numbers at any cost(J-10c was cut on relative merits).
Furthermore, we still have situation where J-15T/D are still in production, and will be for many years to come.
Immediate tuning down of J-16 production corresponds to 3 events:
(1)J-16 intended fleet is probably more or less complete;
(2)J-20A, J-35A and LWs enter mass production, weight of effort is directed elsewhere;
(3)J-36/XDS entered trials, i.e. starting with their introduction some ~5-7 yrs down the line, one or both these models will likely start replacing, among others, early J-16s themselves.
J-16 is >10 years old and it's ultimately a flanker; they shouldn't have that much airframe hrs, and we know they were flown damn a lot. First batches are likely getting close to big refurbishments and second part of their life.
Now, what can J-16 do over J-20? 2nd pilot with great station flexibility, probably range without drop tanks(huge low density airframe without internal ducts and bay), more pod and oversized payload options (J-20 is ultimately limited to 4). Plus, of course, ease of adding them in numbers and desired combinations down the line.
We can combine it with apparently significant J-20 bay depth restrictions (not conclusive, but after recent J-35A thread, it really looks this way if you look at bay bulkheads closer), and the picture paints itself.