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SamuelRSmith said:

I know what gets taught in PRC schools, I know what sort of shit gets sanctioned to air on PRC TV.
And I've read Chinese textbooks, haven't found anything special except for typically skewed point of view on national and world history. Rest assured, British or Japanese textbooks are equaly as skewed without all-mighty government brain-wash ;)

Racism doesn't have to mean they believe that they believe the other race to be "defective", it just means they have to hate based on their race.
Racism is considering certain people to be "untermensch" based on their race (or rather what these kind of theoretics consider a race as their definitons are rarely scientific). Call it Chinese nationalism or chauvinism (in it's original meaning), that's more appropriate, but not racism. Your definition is common misconception, probably due to broad usage of the word "race" in English, which is often outside of its strictly scientific meaning.

Finally, I think you'd find that most Chinese will easily be able to determine the difference between Chinese and Japanese.
I could distinguish Chinese from Japanese, not a rocket science. Doesn't rule out the fact they are both Mongoloids, though this fact certainly doens't make racism impossible due to its non-scientific nature :D