In some cases, if that parent left Hong Kong and never naturalized as a BDTC, then that person actually lost their HK PR. (My dad remembers getting a letter from HK at the time he left stating this.)
The really interesting bit though is that it only says your parent has to be a Chinese national settled abroad at birth - no mention of holding HK PR at birth, only at the time of application. Previously, I've noted ways that HK seemed to favor children with Chinese nationality over those born with foreign nationality, but this flips everything I've said on its head.
So take a Chinese mainlander who marries and moves to Canada (and has no connection to HK at this point in time), settles there, has a child born in Canada, then naturalizes as a Canadian, and then later is able to come to HK as a Canadian citizen (say under GEP) and gets ROA after saying 7 years there.
That person's child seems to be eligible for ASSG (as long as the other requirements like age, degree, work experiece, etc at met). However, if the parent were for some reason not deemed to be settled abroad, and by the time the parent gets HK PR the child is over 21, then the child gets nothing (even though in this case the child may possess Chinese nationality).
On the other hand, an HK PR parent (who has this status at the time of birth of the child), who later naturalises to a foreign nationality and then has to renounce the Chinese citizenship (e.g. applying for a security clearance in a foreign country with the parent's other nationality) and doesn't get the chance to return to HK in over 3 years, will get downgraded to RTL. With only RTL, even though the parent had HK PR status at the time of the child's birth, the child would seem to not be elgible for ASSG.