Laowai, is the term offensive?

Ratfink (Australia)

When I first visited the Mainland in 1978 people would point and say "Laowai" as there were so few Caucasians in China. Hong Kong in the mid 60s was the same, once you got out of the tourist areas, many times people would say "gweilo". I've found that smiling and being polite stops most people from saying laowai, though I use the term to describe myself a lot, and also gweilo when in Cantonese areas.

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The original piece: http://bbs.chinadaily.com.cn/thread-879259-1-1.html

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