The question is how much larger C919 can get. Normally, aircraft end up getting larger and larger as aircraft makers reduce weight, improves range & aerodynamic profile. And then they do a re-engine and voila. The stretched version becomes the most optimized version of the aircraft. So yes, they do need something that's stretched and can compete with A321NEO.
I just noticed C919 actually has a slightly larger wing (in terms of wing area) than A320 series. If they put some kind of winglet at the end and stretch a few rows, they can get probably a MAX9 sized aircraft next. Do a second stretch and they have something that can challenge A321. Of course, need a larger engine for that also.
For that, AECC should work on developing more powerful variants of the CJ-1000, i.e. CJ-1000B, CJ-1000C, etc etc.
In the meantime, COMAC can work on stretched variants of the C919, perhaps giving the -100, -200, -300 etc for initial and stretched variants.
Or maybe COMAC could just forgo the C919 altogether, and start working on the C939 (and its variants) as a clean-sheet, direct, better successor to the C919 (plus having an even higher degree of indigenization than the C919) that is capable of competing face-to-face with Airbus's A321-XLR and Boeing's NMA on the future narrowbody market.
For the later option, the general idea would be for the C919 to be seen as an experimental platform for China's large-sized jetliner development programs, while for the C939 to be seen as a truly mature, complete and competitive platform.
(Perhaps the same can be done for C(R)929 and C949?)
Once that happens, you basically vacate the lower end of single body. And then you can have something that competes with E2/A220 there
Aren't E2 and A220 considered regional jets instead of narrowbody jetliners? Perhaps further development on the CJ-500 (meant for ARJ-21) could be used on ARJ-21's successor.