Michael,
The component you've circled is an installation aid that depresses the piston in the injection pump so it will clear the cam lobe when you R & R the front case cover. Scroll down to my post ""Acceptable Slop in Crank to Balance Shaft..." and look at the second image. It's a shot of the backside of the front case cover. The cover is upside down so the injection pump is in the upper left hand corner. You can see the back side of the circled component behind the injection pump. Scroll down to the next photo and you can see the location of the injection pump cam lobe in the lower left corner.
The way the installation aid works is that half the shaft is removed for the last 15 mm or so, such that if you looked end-on at the shaft, it would appear like the letter "D" - flat on one side and rounded on the other. The operational position is with the flat towards the injection pump piston. During reassembly, you turn the nut on the outside of the case and the "D part of the shaft rotates until the rounded part bears on the piston and depresses it just enough to clear the cam lobe. One you get the case cover on and secured with a couple of bolts, you rotate the nut until you feel it lose contact from the piston.
Congratulations your Changfa acquistion - you're going to have a lot of fun with it. They're hellishly loud and sound like they are going to come apart at any moment. It's taken me a while to realize that Changfa noise is a lot like Detroit Diesel noise - that's just a characteristic of the machine and isn't indicative of imminent failure.
Cheers,
Terry