Is The Monkey King based on the ancient Chinese fable of Sun Wukong?

No, this novel by Timothy Mo is not exactly based on the Chinese fable of Sun Wukong, the Monkey King, but Mo is using this title to connect his main character's learnings about the ways of Confucianism to the story of the Monkey King. 
On his journey from China to India, Sun Wukong is supposed to be protecting a monk, but is acting too unruly, as usual. The monk is given a headband to wrap around Sun's head that makes him behave. As John Rothfork points out in his essay analyzing "The Monkey King" and Confucianism, the ethics of Confucianism become Wallace's headband—they give him discipline, make him act more like a man, and ultimately make him successful in his life missions.
I also see a connection in that the main characters of both stories question and subsequently confirm the virtues of certain parts of Chinese culture. Sun Wukong rebels against heaven/Buddha, but he repents, reaches enlightenment, and is eventually granted Buddhahood. Wallace and his story in "The Monkey King" put Confucian philosophy to the test, and in the end he finds success in life by following Confucian principles. 
 
https://oak.ucc.nau.edu/jgr6/monkey.html