data type should i use to read chinese and english characters

Not byte! How can it be? You should use System.String which is the Unicode string, so it supports most languages at the same time. When you communicate through the network or any other kind of stream, all the text data is converted to/from the array of bytes anyway, but each character takes different number of bytes, 1 to 4, because Unicode supports code points in the range 0 to 0x10FFF. The particular presentation depends on UTF used for serialization. Internally, in memory, .NET (and Windows itself) uses UTF-16LE, where each character takes a 2-byte words or two such words called surrogate pairs, which is needed for characters beyond Base Multilingual Plane (BMP) which takes first 00 to 0xFFFF code points (excluding special ranges reserved for surrogates themselves).

All UTFs are equivalent. Despite their names showing number of bits, they all support all code points. In the files, there are usually detected by the BOM. Please see:

http://en.wikipedia.org/wiki/Unicode/[^],
http://en.wikipedia.org/wiki/Code_point/[^],
http://en.wikipedia.org/wiki/Byte_order_mark/[^],

http://unicode.org/[^],
http://unicode.org/faq/utf_bom.html[^].

[EDIT]

In memory, you always work with strings. When you need to pass the via network or persist it in the file, you choose some encoding which presents the text in the form of array if characters and visa versa. You need to choose only one of UTFs. Prefer UTF-8. To do it directly, use the class System.Text.Encoding or/and its derived classes for every particular encoding. Please see:
http://msdn.microsoft.com/en-us/library/system.text.encoding.aspx[^].

You can directly use the methods GetBytes (text to array of bytes) and GetChars (to get Unicode characters).

For example, to get a string from array of bytes:

byte[] data = //let's say, received from network...

//...
string value = new string(System.Text.Encoding.UTF8.ToChars(data));

—SA