Question: The term is [妖精](https://zh.wikipedia.org/wiki/%E5%A6%96%E7%B2%BE), which can be translated into English as "fairy", "elf", "goblin". As noted, the Japanese literature uses 妖精 to describe the European fairy. The English translation of 白骨精 in 西游记 (Journey to the West) is "white bone demon". So, this word can be translated into English as fairy, elf, goblin, or demon. 

Let's say an author is writing a fantasy story in Chinese first, using terms that are understood in a Chinese society. Then, the same author translates his/her own story into English and faces a problem. Which term should 妖精 be translated into (fairy, elf, goblin, or demon)? Or are the differences between the terms negligible, so the author can just pick a random one and go with it?

Answer: 
That depends on how much this character is important to the whole story and how much chinese feel you want to retain.

If the character is very important and no english word can express it without distorting its essence, you should invent a new word in english for it. It may be the literal pronunciation of the chinese term or something else. You must give your readers enough details, so that they can picturize it uniquely in their minds.

If the character is not so important, but still cannot be represented by normal english words. You take an already existing word and change its definition in your story. You may define that fairies in your story don't have wings and look ugly. It'll work as long as you maintain consistency.
It depends on whether you want to maintain a feel of Chinese culture and mythology in your story (which can be very effective but involves a lot more than just translating the story), or you want to adapt the storyline into something that feels more familiar to Western readers.

**If you want to maintain a Chinese feel** then you may want to introduce the entity as "yāojing—a mischievous fairy-like creature without wings" or "a malevolent elf-like creature with powers of enchantment" or whatever is appropriate for the nature of your creature. There is nothing wrong with showing the reader that there is no sufficient word for the creature—in fact, that makes your story more interesting.

**If you want to adapt the story to something more familiar,** and there is just one such creature, give it a name, refer to it by its name, and readers will learn about it as you describe its appearance, history and behaviour. If there are many such creatures, all alike, you certainly can "shoehorn" them into an existing concept like goblin, demon, devil, imp, spirit, shade, ghost, ghoul, spectre, witch, or [familiar](https://en.wikipedia.org/wiki/Familiar_spirit). Alternative spellings like daemon, faerie can help emphasise that the creature is a little different to the established concept. Or, you can name your "species" (think of the *Ents* in Lord of the Rings, *dementors* in Harry Potter, or the *Ogier* in Wheel of Time), and describe them as I have suggested above.