Word mutations in Taboo
From the rules here

No form or part of ANY word printed on the card may be given a clue.
Examples: If the Guess Work is PAYMENT, &quot;pay&quot; can not be given as a
clue.  If DRINK is a TABOO word, &quot;drunk&quot; cannot be given as a clue.

So by looking at the Drunk/Drink example I'd say it was very clear that &quot;China&quot; can not be used when a taboo word is &quot;Chinese&quot;.
I would chuck my usual caveat in here when answering question on games like this.  Always remember you're playing a party game and it's meant to be silly fun.  It's not an exercise in rules lawyering.  If there is a player who wants to have a lengthy debate of if China/Chinese are the same or not I'd probably avoid that player in the future!
If one team get very close to the breaking rules then I'd let it pass but let the other team get away once with veering close to rules breaking once as well.
In the UK there is a radio comedy party game called 'Just a Minute'. in this game the host will regularly give player what is called &quot;the benefit of the doubt&quot; if a rule is broken in a minor way or its ambiguous but will try to rule in favour of another player later in the game two keep things fun and light.