I actually still see a lot of utility in such a weapon in the future to support UAVs and UCAVs, who will be the tip of the spear with manned aircraft operating as fast responders. Which is where the value of a powered missile shines due to its speed.
UCAVs will mostly carry lighter short range missiles for direct attack on hunter-killer missions, so if they spot a target of opportunity too big for their onboard weapons, being able to call in a fast heavier weapon would be massively beneficial. Sure, you can use glide bombs, but those are slow so you risk the target rabbiting in the meantime.
The KH29 is short ranged, but that also makes them cheaper, and lighter, meaning a CAS jet can carry more of them and stay on station longer. Some of the bigger UCAVs can also carry them.
Lets ignore for a while the image itself is old one. And there's a possibility PLAAF isn't using such kind of weapons anymore.
Just generally speaking, why is kh29 type of weapon unsuitable for today's needs:
It's too big. We're talking about a 690 kg weapon. It's a 4 meter missile with sizable wingspan. Basically, one missile is gonna take up a heavy pylon of pretty much all PLAAF's planes. J-10 will be able to carry 2 such missiles. JH7 and J16 would be able to carry more, of course, but in their place it'd be better if a different weapon was carried.
So what does one get for that 690 kg of weight? a 320 kg warhead. Which is really an overkill for any sort of time sensitive target. We're taking about a warhead close to a 500 kg guided bomb class. Literally, kab500kr weighs 520 kg and has a 380 kg warhead. kh29 is not far off.
kh29 was always envisioned to go after fixed targets, not time sensitive ones. Rosoboronexport catalogue lists pretty much just such targets, with addition of a 10 000 ton ship. Today, of course, attacking a ship with a missile of such range would be lunacy.
So what PLAAF would be better off using instead of kh29 would be either
A) longer range weapon to engage fixed targets, with a similar or even a bigger warhead. That weapon could be just as fast or it could be stealthy. Or it could be cheaper, relying on gps guidance only. Or a combination of the three.
or B) a much smaller weapon that is indeed optimized to use time critical targets, such as, for example, any relocatable command vehicle, radar vehicle, artillery piece, etc etc.
So basically, what's needed is either a glide bomb with 500+ kg warhead. (PLAAF already has it) or a stealthy cruise missile (PLAAF already has it) or a small form missile or stand off bomb like sdb/stormbreaker/spear 3 or, if something a bit larger is needed, then the SiAW misile.
Though there have been no indications that PLAAF has any of the 4 types of weapons mentioned.
KH29 is simply in this strange in-between space, its specifications and size stemming from the technical and doctrinal limitations of the soviets/russians in the 1970/80s and later.