This one is already there: http://www.worldheritagesite.org/sites/t5327.html.
And indeed at least part of it seems already to be inscribed via the Grand Canal WHS (maybe not the whole urban area)

You are correct, I think the count is wrong, both tentative lists are the exact same for China with 54 nominations. worldheritagesite.org displays (53), while UNESCO displays 54.

Unesco website still shows "The Lijiang River Scenic Zone at Guilin (1996)", which already has been inscribed

I don't know why I didn't see that?

Anyway, I wonder if there is any purpose in keeping this nomination or if its just an oversight? When reading the nomination, its a far more extensive nomination then whats included in the South China Karst WHS.

Indeed, The Lijiang River Scenic Zone at Guilin mentions a far more expansive portion of Guilin, including sites like the Reed Flute Cave which is currently not part of an inscribed area. It also mentions several cultural sites, including Lingqu Canal (which is a newer tentative nomination)

I assume its an oversight, but it also could be an option for a mixed nomination, or if the Lingqu nomination fails to develop, a more extensive nomination including several sites within the "scenic zone".

I've brought it back, so we're accurate on China now.