Frustrating isn't it. On this point I think I can fully agree with you and your fire breathing friend and say that many Chinese show a distinct ignorance towards foreigners and foreign culture. Perhaps as a fellow Brit you will have heard the story I'm about to re-tell which I feel acts as a good analogy for the way that the Chinese think and behave.

During the napoleonic wars there was a genuine belief that our great island nation might be invaded by our good old foes the French under the command of their pint sized leader. As a result there was a lot of propaganda and nasty things floating around about our Gaelic cousins and so it was with a degree of caution that the people of Hartlepool watched a French fishing vessel floundering off the north east coast of Britain. Once the ship had finally sunk and the wreckage washed ashore there was discovered to be a lone survivor - the ships monkey dressed, would you believe, for comic effect in a military uniform. A court was convened there and then and because no one could speak French the monkey had a difficult time defending itself and as a result was hanged for plotting to invade the British isles.

Something of an urban legend and the story may or may not be true but I think it describes most of the aspects that have contributed to the way the Chinese think

1. Limited exposure to foreigners and foreign cultures
2. A lack of information on foreign cultures
3. When information is provided it is usually to meet the needs of an agenda ie. to strengthen the national identity

Lets hope that these ethnocentric and nationalistic trends don't grow any further in china or the west for that matter. With my close Chinese friends I have often asked them over the past few months why they feel that that particular small group of islands that dominates the local news has suddenly risen to prominence. Don't they think it's something of a coincidence that it occurred right around the same time as a major domestic power transfer? There was an interesting and frank interview on the bbc given by one of the Chinese who protested outside the Japanese embassy last year. He basically said well what do you expect! We've been taught from school to hate the Japanese. The big problem now might be can the Chinese authorities screw the lid back down on all the hatred they have created towards foreigners in their own society or will it spin out of control.

However, we see the same sort of thing happening during elections in the west. Who is going to be tough on national security, terrorism, crime, etc. ? It seems there always needs to be a threat, someone different from us, in order for us to find our own identity. Lets hope that we as a human race can avoid the same mistakes of the 20th century and come to terms with our differences in the way we choose to live.

Personally, I was taught as a child that when you go to a foreign country you are acting as an ambassador for your own culture. Therefore, I prefer to take the root of introducing lateral thinking and reasoning via education to these people who see us all as laowai, as opposed to being aggressive towards them or shouting back at them which is where all these problems stem from in the first place.