A traditional gift is a clay horse, which they paint in bright colours.

[Biro]

"A traditional gift is a clay horse, which they paint in bright colours." Is this a correct sentence with a nonrestrictive clause "which they paint in bright colours." ?
And if I write : "A traditional gift is a clay horse that they paint in bright colours," is it also a correct sentence but now with a restrictive clause ?

[Mister Micawber]

Yes and yes.
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Native English teacher at Mister Micawber's