That number is fairly reasonable especially since the plan is only for a week.
I agree, and the most likely outcome here is that you deposit your coins and get paid the interest as advertised. But there is a not insignificant possibility that Huobi make a few bad investment decisions and your coins are lost. Not worth the risk.
That said, it's weird for an exchange that claims daily volume trading in billions to look for funds to borrow from customers at these rates.
It's the same as banks. Whatever they are offering their customers, they know they can make more than that using customer's money and pocket the difference as profit. With banks it is expected - it is no secret they run a fractional reserve system and the money you deposit is either loaned by the bank to other customers or invested in various assets or vehicles. With crypto exchanges it is different - people (naively) expect that when they deposit bitcoin to an exchange, and exchange simply "looks after it" for them. As I said above, Huobi have already been caught investing customers' deposits in high risk investment programs. If you deposit your coins for this 4% ROI, then your coins will be invested similarly, and therefore you might not get them back.