I don't think that it is a coincidence that my answer agrees with the OP's first computation. So, although the OP didn't actually describe his thinking, I went ahead and posted my answer.
Yes, you do want to use conditional probability, but (in this instance) the application of it is convoluted.
Let $~A~$ denote the event that the $~3~$ children are of three different races.
Let $~B~$ denote the event that the 2nd child is Chinese.
Then, you are asked for
$$p(A ~| ~B ~) = \frac{p(A \cap B)}{p(B)}. \tag1 $$
So, the entire problem is reduced to computing the numerator and denominator, in (1) above. Since this problem is a combinatorics-oriented problem, I will express the probabilities of $~p(A \cap B)~$ and $~p(B)~$ combinatorically.
The denominator is easy. There are $~\displaystyle \binom{32}{1}~$ ways of selecting the 2nd student, of which $~\displaystyle \binom{18}{1}~$ of these ways will result in the person being Chinese.
Therefore,
$$p(B) = \frac{\binom{18}{1}}{\binom{32}{1}} = \frac{18}{32}.$$
To express the $~p( ~A \cap ~B ~) ~$ as $~\dfrac{N}{D},~$ the simplest approach is to assume that order of selection is relevant in both the computation of $~N~$ and the computation of $~D.$
So, $~D = \dfrac{32!}{(32 - 3)!} = 32 \times 31 \times 30.$
Computation of $~N,~$ the numerator is convoluted, and must be broken down into the following mutually exclusive cases, that must then be summed together:
Malay, Chinese, Indian.
$~\displaystyle \binom{8}{1} \times \binom{18}{1} \times \binom{4}{1} = 8 \times 18 \times 4.$
Malay, Chinese, Eurasian.
Similar to the previous bullet point, the computation is $~8 \times 18 \times 2.$
Indian, Chinese, Malay.
$4 \times 18 \times 8.$
Indian, Chinese, Eurasian.
$4 \times 18 \times 2.$
Eurasian, Chinese, Malay.
$2 \times 18 \times 8.$
Eurasian, Chinese, Indian.
$2 \times 18 \times 4.$
Therefore,
$$N = [ ~8 \times 18 \times 4 ~] + [ ~8 \times 18 \times 2 ~]
+ [ ~4 \times 18 \times 8 ~] + [ ~4 \times 18 \times 2 ~] \\
+ [ ~2 \times 18 \times 8 ~] + [ ~2 \times 18 \times 4 ~].
$$
Then, $~N~$ can be re-expressed as
$$N = 18 \times \left\{ ~[ ~8 \times 4 ~] + [ ~8 \times 2 ~]
+ [ ~4 \times 8 ~] + [ ~4 \times 2 ~]
+ [ ~2 \times 8 ~] + [ ~2 \times 4 ~] ~\right\} $$
$$= 18 \times 112.$$
Therefore
$$p(A \cap B) = \frac{N}{D} = \frac{18 \times 112}{32 \times 31 \times 30}.$$
Therefore,
$$\frac{p(A \cap B)}{p(B)} = \frac{\frac{18 \times 112}{32 \times 31 \times 30}}{\frac{18}{32}}. \tag1 $$
Notice that in (1) above, both the numerator and the denominator have a common fraction of $~\dfrac{18}{32}.$
Cancelling this out gives
$$\frac{p(A \cap B)}{p(B)} = \frac{\frac{112}{31 \times 30}}{1} = \frac{112}{31 \times 30} = \frac{56}{465}.$$
$~\underline{\text{Addendum}}$
Hijacking the analysis in one of the comments of lulu, the problem can be re-interpreted as a purely probability problem that does not involve conditional probability.
Since the 2nd child chosen is Chinese, as far as the selection of the 1st and 3rd children are concerned, you are now working in a universe of $~31~$ people, of which the number of Malay, Indian, and Eurasian are $~8, ~4,~$ and $~2~$ respectively.
So, the probability can be expressed as
$$\dfrac{N}{D} ~: ~D = 31 \times 30,$$
where
$$N = [ ~8 \times (4 + 2) ~] + [ ~4 \times (8 + 2) ~] + [ ~2 \times (8 + 4) ~] = 112.$$
So,
$$\frac{N}{D} = \frac{112}{31 \times 30} = \frac{56}{465}.$$