"nese" -Japanese, chinese, etc. as a term of rasism by western people

That's very amusing. It seems as though these were just ignorant people. They may be very intelligent, but they have not experienced the outside world. That is the problem that causes many of the gripes of foreigners on this forum and elsewhere. Usually these amusing little incidents are not a problem with Chinese. They are more of a problem with peasants anywhere. By peasants I mean people that enjoyed neither comprehensive education nor travel and long-term association with educated people from other cultures.

Of course, I should make the obligatory mention of the Opium War and two centuries of humiliation and an education system that reinforces indignation regarding this history. These factors make provincialism here manifest itself in ways that seem like insecurity and what we love to call an inferiority complex, much as you have described. Generally, more worldly Chinese - particularly those that have received something beyond just technical education abroad - are able to get beyond these vexing little provincialisms.

I will be accused of extreme elitism - a sin that may well rival racism - but I have always argued that the complaints foreigners have about Chinese - all of the misunderstandings - stem largely class rather than race. Here I am suggesting a global class structure and rank in it is not determined only by economic wealth or even gentility. After another generation of being part of the global class structure, these views will be harder and harder to find, at least in cities like Beijing.