That sounds reasonable to me for an old Norinco - have you tried different brands of 40gr to see what it likes best?
A lot of people seem to find 22mags fussy about the faster 30gr ammo, either love it or hate it. My old Savage 93g didn't mind it, from memory most ammo types grouped around 1moa when I did my part but it was a few years ago now. Mostly used 40gr Fiocchi because it was the cheapest and shot as well as anything else I tried.
You might get an improvement (or at least less variation between different brands) with a shorter barrel, whether its worth the effort to find out probably depends how much you like the rifle.
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