It would have been done to correct the tuning - though apart from a few bizarre anomalies I tend to find that the tuning is pretty good on Chinese sopranos (they're copies, after all).
In the case of allowing a mouthpiece to be pushed further on, it seems like a rather extreme 'fix' - and if you look at the cork it doesn't look like the last few millimetres have seen any action.
As long as it plays in tune for you it's not going to be a problem.
One slight note of caution though - it looks like the cup arm has been soft soldered onto the key barrel, which isn't the most reliable fix. Should be fine as long as the key isn't subject to any great stress, which it won't be in normal use.