I read somewhere which vaguely mentions that if someone in the top 16 cannot qualify due to exceeding the limit of 3 from each country, then the player ranked 17 will be considered as in the top 16, and so on. With China having 5 players in the top 16, that would mean players ranked 17 and 18 also qualify.

Is that right?

I don't think so!

You can find the official rule on worldbadminton.net : http://www.worldbadminton.net/Portal/documents/compregs.PDF