One of the themes of the movie is 'outsiders', people that for one reason or another are not fully integrated or fully understood by their peers, parents, siblings.
Cherita is an outsider because she looks different and is a bit awkward. The movie is set in the mid 80's where perhaps there were fewer asian immigrants in the USA, and perhaps it was a little less socially unacceptable to express racially inspired abuse like that, particularly amongst adolescents.
Donnie himself is clearly an outsider, but of a more subtle kind. His family know that he has issues and is seeing a psychologist or psychiatrist, but beyond that he is less isolated socially than Cherita seems to be. However he knows that he is different, and is experiencing things he does not understand. I believe he empathizes with Cherita and wants to help her. I believe the abuse she gets and Donnie's response is used by the writers to reveal Donnie's empathy with another outsider and his innate kindness, as in many other respects he does act like a bit of a jerk towards his family.