discrimination always exists, in all societies.
but sometimes we shouldn't be over-sensitive about such things.
the word "chinese" might originally contain this discriminatory connotation but i believe most people who use it today do not mean that or probably aren't aware of it at all. over time, it has become customary and its pejorative meaning disappeared.
and aren't we chinese people very discriminatory ourselves? people in one region despise people in another, even though we are all chinese. and in our history, we used to refer to those small neighbouring countries as "man yi". it arises from ignorance, just like the westerners initially called us "chinese" because they didn't know about us well.
being too sensitive about such matter only demonstrates a lack of confidence in oneself. we ought not to be bothered too much by this. :)