Foreigner sounds better than "alien" or "outsider" or something like that. Besides, you have to use a word to describe this. It doesn't really have a negative connotation either as far as I know and is used to describe many things like "foreign language", "foreign movies", "foreign food" etc. You could use "exotic" to describe these things, but not everything foreign is really exotic. For example, German stuff is "foreign" to me but it's not really "exotic". All in all foreign/foreigner seems the best way to describe it. And generally I don't think people mean to offend you with it. If a Chinese calls me foreigner or something I won't take offense either. It's just a conclusion, I'm not Chinese hence I'm from abroad, ipso facto, I'm a foreigner.

I guess I better comment as I was the one who kind of started this question. I don't like 老外. plain and simple. I am not the only person that feels this way. I have seen a few forums where the topic of 老外 and its use is discussed. History has shown that words to describe other races may have been accepted as norm later to be classified as racist, prejudice etc. The people who feel the term is normal usual is not the race it describes but the ones saying it. and the people who classify the word as racist is the race it refers too. 老外 is used by many chinese to describe a non-chinese person. I don't see how this word is used affectionately. all of the time I hear it like this (with translation). Hey Lao wai do you want to buy something? the laowai wants rice with that. mom look its a laowai. laowai come here. laowai's can't speak chinese because they are laowai. they are just stupid laowai. what do you want laowai? As Peter_UW said it can be insulting and causal and NEVER make someone feel respected. I guess the question is what should a non-chinese person be called in chinese? the answer is simple. call them what a chinese person calls another chinese person. for example 先生 (xiansheng)，叔叔（shu shu), 哥哥 (ge ge) 朋友（peng you). aiyi (aunty) 帅哥 （shuai ge) etc. there are many words to use. I here these words often in my everyday life here in china. And I will add not all chinese people say 老外。I find many of them address me as the would any other chinese person.

or if your in America, "foreigner", "immigrant" can be casual or insulting, but would never make someone feel respected. Apply the same logic.

Fireflytech's hunch is completely right. 老外 can be insulting or casual, but would NEVER make someone feel respected. Nevertheless, most people say 老外. However, lets say you're at a business meeting and you want to be diplomatic, I would not call a stranger who is a foreigner a “老外”. If possible, address them by their country. If not possible, I would just address them like a fellow Chinese or without any special annotation. "waiguoren" snds more respectful for me but still not that great or... maybe Firetych just doesn't like being called old haha

It sounds funny in a place like iTalki, but if I were speaking to someone from my own country, "foreigner" may be acceptable.