I hear this all the time as I walk through the streets of Medellìn. I initially would go out of my way to correct them and say "No, soy Koreano!" Then I realized that they don´t intend to be hurtful or racist and that instead they think China is a continent.
As I look back now, I think it´s funny how I was so sensitive about my race. I volunteer with underprivileged kids at Casa Karah (aka I play with really cute little kids). At first, I was very surprised that the kids would call each other racial slurs. Hey morocho (brown one) come here! Yo negrito (little black one) pass me the ball! But then I realized that they weren´t racial slurs, but rather terms of endearment! It is amazing how they acknowledged the differences and then appreciated them.
It seems Colombia´s race relations is light years ahead of the US´s. Before I realized this, my roommate, Luz Dary, asked me if she could go to the US and call an African-American a negrito or an Asian-American a Chino. I laughed at her and told her that we would consider her ignorant if she did. But looking back, maybe the joke´s on us and we´re the ignorant ones...