People say they don't say it, but they do when talking about you without even thinking about it.  Just accept it as a second name.  Your get the rockstar treatment, and laowai is like a Hollywood star being called by his movie character name.

It's not necessarily to be taken badly, even the young foreigners can be called it.

I actually get called waiguoren or waijiao most of the time. I guess it just depends on where you live. If it's a kid saying it, I say hello and smile at them. If it's some older person I don't know, and I can tell they are just curious, I might smile at them. However, if I get the "hello!" and laughter, I just ignore it. I work at a college, so I would get that a lot from groups of young guys when school started. Then for some reason, a few of them started doing that again when the new semester started, but not for long. To be honest, this is a small city, and I'm the only young white girl in the city, maybe even for the last few years. People stare at me while they're driving or walking by. Unfortunately, I can't go anywhere without being stared at. There was even a time I was eating breakfast in the school's cafeteria, and one of the workers came over and stared at me, walking around to see my from all angles, even asking the person I was eating with some questions. My students are still shy around me, especially the boys, but they call me teacher.

"Laowai" in itself is not necessarily a bad word, it depends on how it's used. No one has ever adressed me in an unfriendly manner, so I try to be nice, although sometimes I do get grumpy about it. If the person is being rude, I would say that you don't have to be nice, as long as you don't pick a fight.

Just answer back " Hey Sa Bi !"

Everyone sais its not rude, and when you translate it, it isnt, but many rude things in Chinese dont sound rude when translated, Its all about meaning. I dont mind it when friends say it, but i find it a little offensive. Chinese always say its not rude and a little polite, but heres how you tell its rude.

Say it in front of Chinese, they will giggle like you just said a bad word.

Just ignore it.

I ignore the laowais. It's usually just some idiots who have no clue how annoying they're being, but generally they're not malevolent, just stupid arrogant and you'll never be able to chip away at Chinese arrogance: it is the strongest force on the planet. So I ignore it.

But when I get a waiguolao or a yangguizi, my answer is usually 'cao ni ma de'.

usaly it's my wife trying to get my attention

"Hey Shabi!"

would you respond to a rock if it shouted anything at you? sadly many people here are as intelligent as a rock but it could be argued that rocks are smarter becuase they know to keep quiet

You simply answer, hey Lonai, which means "insider", hopefully they get the sarcasm.

How about "Hey Zhongguo ren" in response?

Your answer is neither correct or wrong! That is not the common way to respond to Hey Lowai, but it's not incorrect to say that to someone if that is how you as a person an individual respond to people. Most people if they say 'HEY' in China or other places in the world don't respond at all. Unless of course is 'HEY' is your name and you like to be called Lowai!

Given the situation (having it yelled at you from some wanker in a car), yeah, I think your response was the right one!

Maybe u can say "Hey, Laonei"...

Too funny, ok I'd say your response probably wasn't the best way but then again neither was his.

I just answer "Hey, Laonei".....it's a joke, but as a Chinese, they won't get it and I have fun with it.