Which one is correct?
To put a predicate after nationality
His nationality is Chinese.
To put a noun after nationality
His nationality is China.
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It's confusing, perhaps because 'china' is used both as a noun and an adjective.
As a noun, it relates to either China as a country, or china (as porcelain).
Here, as 'nationality' is a noun, you need to use an adjective if you want to modify or qualify it - hence 'Chinese' is correct and 'China' isn't. Here, the sense is a direct reference to 'China' as a country.
When 'china' is used as an adjective, it is only ever in the sense of 'a china doll' or 'their china anniversary' - relating to the sense of 'porcelain'.