: How to describe a mythological creature that English has no vocabulary for? The term is 妖精, which can be translated into English as "fairy", "elf", "goblin". As noted, the Japanese literature

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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.

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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. 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.

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I suspect you may be missing one - the Aos Sí (or Sidhe) from Irish mythology. They are the 'fair folk' or the 'lordly ones'. They can be beautiful and hideous. They predict/cause death. They are relatively benign, unless angered. They fit all of fairy, elf and demon.

One Sidhe would give artists and musicians their inspiration - at the cost of their life. Others would steal children.

Modern (IE Tolkien/D&D) elves derive from this as does fairies, banshees, leprechauns and others. Over time these usages have become biased towards cartoonish niceness.

I'ld go for White Bone Demon or White Bone Elf depending on how potentially evil they are.

(would post this as a comment, rather than an answer)

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Does it have to be an actual translation? Translations don't always work, as synonyms get lost in translation. As you mentioned, there is no English word that can mean "fairy", "elf" and "goblin".

Translating to any of the options will mean that you lose out some of the ambiguity. Maybe it's important in your story that the creature's alignment is unknown. If you translate it to "fairy", readers will interpret it as good. If you translate it to "goblin", readers are liable to interpret it as conniving or evil. You can't retain the ambiguity.

Instead, you can simply pick a name without any inherent meaning (or suggestion about alignment), and then define the creature through observation rather than naming.

The Wikipedia page you linked has an English variant, where the chosen name seems to be Yōsei. Why not use that, so you don't bias your readers and are actually able to assume direct control over steering the viewer's observation; as opposed to relying on existing words with Western connotations?

Fairy = small and benevolent. Has a physical shape but they are inherently magic.
Spirit = ghost or ethereal entity, lacks physical shape.
Elf = humanoid creature with magical affinity and often has an expanded lifespan. Often acts as a counterpart to the human race. Alternatively (but less commonly), very similar to a fairy but not as magical in nature.
Goblin = Conniving, tinkerer, likely evil (or at least lacks moral principles). Humanoid, but lesser to elves and humans.
Demon = almost definitively evil. Possible religious connotation (demons are to the Devil what angels are to God; henchmen). Known to possess humans.

These are in no way guaranteed traits, but if the reader reads the word, they are liable to make inferences as to what the creature is like.

Because 妖精 can mean all of these things at the same time, the reader is therefore unable to make a choice between the listed interpretations. They must assume a generalized shape. But as English lacks a word that encompasses all definitions, you're much more likely to have your English readers pidgeon hole your creature by the common definition of the word you chose to use.

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The differences between 'fairy', 'elf' 'goblin' and 'demon' are not negligible. The fact that a dictionary offers you all of them, or that all have been used in different setting in the past, does not imply that all those words mean the same thing, but that in different situations or contexts, they can be used to describe a Yōsei. (That's the transliteration of the Japanese creature you wish to refer to, right?)

Let me reiterate that: in a certain subset of contexts, 'Yōsei' best translates as 'fairy'. In other contexts, it does not. In a certain subset of contexts, 'fairy' best translates as 'Yōsei'. In other contexts, it does not. Their semantic fields do not wholly overlap.

To find the right translation, you need to have a good understanding of the differences between the various possible terms in the target language - in your case, the difference between 'fairy', 'goblin', 'demon', 'elf', 'spirit', etc. Then, you can pick the word that best fits what you're trying to convey in your story.

Alternatively, you can use a transliteration - 'Yōsei'.

What are some considerations for or against using transliteration rather than an (inexact) translation?

First, is your Yōsei a major story element, or something mentioned in passing? For something mentioned in passing, it makes less sense to go through the effort of transliterating, and demanding of the reader to learn what a Yōsei is. (You would have to provide the information - sending your readers to Wikipedia is a no-no. But learning is still a mental effort, a small distraction from the story.)
How different is a Yōsei from whatever word you picked as translation? The greater the difference, the more reason to use transliteration.
Who is your target audience? If you're writing for children, it's better to stick to familiar words.
How strongly is your story localised? If your story is very explicitly set in Japan, if there are many other cues that set your story in a specific location, 'Yōsei' fits into the setting, while something as European as 'fairy' does so to a lesser extent.

One thing to remember, if you choose to transliterate rather than translate the term: your English-speaking readers are unlikely to be familiar with Yōsei. You'd have to provide them with the necessary information. This is preferably done by means of the story itself, but if that doesn't work, a footnote is an option. Footnotes are often used in translations, in similar situations, but if you're translating your own story, you can alter it a bit, to incorporate the necessary information into the text.

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To a native American English speaker, fairy and elf will both connote a positive or helpful mythological creature that may wield magic. Goblin will connote a trouble maker, and demon will connote a denizen of hell. That may, perhaps, guide your choice.

In wiktionary, 妖精 leans more toward fairy than goblin. I'd suggest calling them fay-like creatures, or perhaps Japanese fairies. Something like this so the reader knows not to envision typical fairies. White bone demon is an interesting idea and if you decide to do that you will definitely be communicating something non-traditional.

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In your example, 白骨精, I'd say the 精 is not so much 'fairy' as it is in 妖精, but rather 'spirit' (like in 精霊), similar to how in English we can use the word 'spirit' to describe a lot of different types of ghouls and ghosts, so spirit might be a good choice as a kind of 'all round' title.

Anyway, I don't have a definite answer, but I would say there's two options.

Option one, rather than translating the other language into an English equivalent you could simply use the foreign word. For example, a 僵尸 would simply be 'jiangshi', rather than 'Chinese hopping vampire'. This would work best if what you're writing is set in a world or country that comes across as foreign to English readers anyway, whether you use English to describe the creatures or not. After all, most people are unfamiliar with foreign mythical creatures, so in some cases the English may give no more of an idea of what the creature is like than the original foreign word.

But then for option two (which is the one I'd use), to be honest I would just say to choose which word (ghoul, fairy, spirit, demon) fits with the image of the creature. Is it small and cute and not very mean? Fairy or spirit should do. Is it ugly and bad, but maybe not so deadly to humans? Maybe ghoul would work. Evil and malevolent and otherwise hurts people? Demon or devil it is.

When it comes to writing the author has a lot of leeway with naming and making up creatures, so I would go with whatever you feel fits the best, whether that be the English or the original word.

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