While in English, the word "gaijin" is far more common than "gaikokujin", I've
heard that in Japanese [外人]{がいじん} has been replaced by [外国人]{がいこくじん} for
reasons of political correctness.

What differences are there between the two words?

  1. Is it merely replacing one word with another, a case of a euphemism treadmill?
  2. Is the former perceived as a contraction of the latter, though Wikipedia claims that the former word pre-dated the latter? Contractions are often seen as derogatory.
  3. Does the latter emphasize that it's nationality that's being talked about, rather than race?
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synonyms offensive-words
Why is gaikokujin more politically correct than gaijin?
`外人` means "outsiders" or "strangers", not necessarily foreigners. When this
word is used against foreigners, the point of view is set to Japan, and it is
presupposed that anything that belongs to outside of Japan, or anything that
came from outside of Japan is an "outside(r)" or a "strange(er)". On the other
hand, `外国人` means "people from a foreign country" or "foreigners", and it is
appropriate to use it against foreigners. It does not have the negative
implications mentioned above that `外人` has. `外人` is not shortened form of
`外国人`, although some people mistake it as so. They overlap, but are not the
same. `外人` hasn't been replaced by `外国人`, but over the recent time, more
people became aware of the misuse and came to use the correct word.
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You've stepped on a potential land mine of debate there. Whether or not
`外人{がいじん}` is offensive, politically incorrect, or means something other than
just "foreigner" is the topic of a lot of heated debate. Take a look
[here](http://www.debito.org/kumegaijinissue.html) for the "gaijin is
offensive side". Take a look at the [Wikipidia
entry](https://en.wikipedia.org/wiki/Gaijin#cite_note-Koshiro_1999_114-10) for
links to the "gaijin is just a word" side.

Which means that for starters, it can't simply be taken as axiomatic that
`外国人{がいこくじん}` _is_ more politically correct, which makes answering your
question a little tough.

As far as I know, NHK and news programs favour the use of `外国人{がいこくじん}` over
`外人{がいじん}` because it is considered more politically correct. However, if you
look at the links in [this
answer](https://japanese.stackexchange.com/a/2081/119), `外人{がいじん}` does not
seem to be on the list of "unbroadcastable" words (although the lists linked
to are unofficial, so perhaps broadcasters have their own in house rules).

The Wikipedia entry you (and I) link to covers a lot of the history and two
sides of the issue, so there's no need to retread them here.

I think that for the purposes of this site and wondering about usage in
Japanese, you can't be given hard rules on this one. I think the guidelines
you need to consider are:

  1. Some people do find it offensive, so know your audience.

  2. Most Japanese are unaware that it is an issue, simply because foreigners in Japan are such a tiny minority that _most_ issues relating to foreigner relations go under the radar for most Japanese.

  3. Whether offensive or not, the word is most often understood to mean non-Chinese, non-Korean foreigners.

* * *

Personally, I feel it is too simplistic to simply assert that a word like
`外人{がいじん}` is or is not offensive. People seem to want to put the entire
burden of responsibility on either the speaker or listener, on intent or
perception, but I believe language is a relationship in which two parties
participate in understanding. So `外人{がいじん}` can be made offensive, or not, it
can be understood as offensive, or not. If you and I were having coffee
together, I could show you how I can take a neutral word like "woman" and use
it as a weapon. But that becomes part of a broader debate about language and
social norms. Too broad to cover here.
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I think a lot of the political debate stems greatly from how one recognizes a
person, in which 外人 and 外国人 have subtly different implications.

> 外人  
>  'outside' + 'person'  
>  stranger, foreigner, outsider

In the context of culture, someone who is not Japanese and is among Japanese
people, or in Japanese land, is a 'stranger,' a 'foreigner,' or an 'outsider.'
That this word can be used as a pejorative though not always carries the
connotation that the 'outside person' may not be welcome, may be rude, may be
disrespectful, as a virtue of being from outside.

> 外国人  
>  'outside' + 'country' + 'person'  
>  someone from another country

This variation can be used to describe the same person, in the context of
prominence. This person does not have to be a cultural outsider, but is from
another country. This word is usually not used as a pejorative, although it
can be used to mark a possibility for lack of understanding, though most
often, in a negative comment, 外人 is more commonly heard, thus lending its
negative connotation.

The end result is that there's a fine line that separates both words, because
both have similar, but not exactly the same, meanings. I would say that 外人
does not always but can border on xenophobia and come up in xenophobic
remarks, whereas 外国人 doesn't necessarily carry the same connotation.

This is all, of course, up for debate, and up to interpretation. I generally
go by the rule that tone and context provide the true meaning of the word when
it is said, so if someone refers to you as a 外人 in a non-negative way, I doubt
that they are being xenophobic towards you, for example.
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