The accepted answer is simply wrong.
It is probably from a Chinese folk tale since it claims to be Chinese. I daresay I have read similar folktales, especially the swallow-the-bead-and-turn-into-a-dragon part, when I was a kid. I cannot figure out the exact one. But it is easy to search out folk stories with similar motifs.
A google book search of “hieun tse” revealed a book “International Folk Tales: A collection of Ancient Folk tales”
I would say that the story is “un-chinese”, created without knowledge of the culture, and the people.