"Japs" is just the shortened form of "Japanese". It's like a nickname.
Likewise, "Nips" is the short form of "Nipponese" (Nippon = Japan) ... ditto.
Were I a German citizen, I might find "Krauts" annoying, since it stereotypes Germans as sauerkraut eaters, which is silly. However, I don't think I'd find it to be particularly bigoted. But... I'm not a German citizen, so I really don't have a frame of reference for an informed opinion.
There are far worse epithets that could be, and have been, used to describe any given racial or ethnic group. I think shortened forms of acceptable terms are, by extension, also acceptable (As a citizen of the U.S., I reference the term "Yanks", as our British friends call us... hardly an offensive term...)
TG
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