From the perspective of Kia2, what is worse:
Insulting people based on their ethnic identity or to deny that their identity even exists?
Like say you insulted all chinese people versus saying that there is no such thing as a chinese person.
What is more hostile towards Chinese people from this communitys perspective?
In your theoretical example if the speaker is intending to insult someone, then they are both equally valid insults. Out of context the first one appears more insulting, since the second one isn't necessarily intended as an insult. The first one is explicitly identifying a thing to assign negative qualities to it.
In general whether you take offense to something or not is entirely up to you. You can't control others, only your reaction.