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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. e.g. https://book.douban.com/...


1

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.


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