It is to solve the problem of weapons and ammunition, 1980 years is a lot of meltdown.
There are a very famous television series “extermination Wulongshan bandits” “WULONG SHAN JIAOFEI JI” a lot of show.
I don’t know if this is a copy of the M1921 Thompson or a modified original but I am pretty sure it is a Post-WW2/Chinese Civil War weapon. I say this because the magazine well and curved ‘banana’ mag look like that of the Soviet PPD-43 submachine gun. Also, the 7.62x25mm Tokarev round(a copy of the Mauser 7.63 pistol round used in imported Broomhandle C/96 pistols and Chinese copies )wasn’t prevalent in China until after large amounts of Soviet weapons and ammo were donated during and after the Chinese Civil War(eventually replacing all other types).The Chinese were not prone to throw away any working weapon and even after the Soviet standardization of their arsenal, they continued to change the vast and varied stocks of weapons to the most available calibers.Some were logical and made sense such as converting all rifles to 8mm Mauser(which was as close to a standard National round as the Chinese had)or 7.62mm Russian(Moisin-Nagant)and all pistols and SMGs to 7.62Tokarev.Others, like modifying BREN LMGs to use AK rounds and mags did not(a 20 lbs+ assault rifle?).
I’m a Chinese.This one wasn’t made in China，but it was modified 7.62x25mm after 1949 to solve the problem of ammo supply because it was not common to see .45ACP ammo in China.However，from 1920s to 1940s，China imported some Thompson SMGs and Chinese factories made various types of Thompson SMGs.
Chinese force used the 7.63mm Mauser round extensively during WWII, so it’s very possible that the Thompson here would see more 7.63mms round going through its barrel than the 7.62 Tokarev rounds, in pretty much the same way how the German forces would feed their captured PPSh.