Lily thought [Pop] was a bit of a racist, too, or at least the sort of reactionary old person who thought a decent Aussie was the best kind of person in the world. (1.16)
"Reactionary" is an interesting word choice here—it seems to show that at his core, Pop still believes that his generation of Australians was the best. They were hard working, humble, and proud of their heritage, and if you're going to say anything against that, you'd best move out of the way. Is it possible that Pop's seeming hatred for other races is really just intimidation because they are different than what he's always known?
[Stan] stood on the corner for a full ten minutes, and in all that time, apart from a couple of school kids, he saw only one Australian face. Saris and veils passed him by, men in funny caps, even a tiny old lady in black pajamas and a big straw hat, the exact replica of a picture in Stan's Grade Two Reader: Our Oriental Friends. (21.3)
Just the title of Stan's textbook is enough to reveal that he grew up in a different time—"Oriental" is not only an outdated term, but one that's considered totally not cool and racist to use today. While his background doesn't excuse his standoffish attitude toward Chinese Australians, it provides a telling glimpse of the worldview he was taught as a child.
Stan was in the sulks. Anyone would think he'd caught the Qantas flight to Singapore instead o the 7:30 down to Central! "What did we fight the bloody war for?" he muttered. (21.4)
Stan may not specifically say which "bloody war" he's referring to, but we can do the math and figure it out. Assuming that the story takes place around the book's year of publication (2006) and Stan is turning eighty, he was born sometime in the mid-1920s. This would make him the age of enlistment in the military around the end of World War II or the beginning of the Korean War. Since both wars involved engagement with enemies from Asian nations (Japan and Korea), it's possible that he could be referring to either one.
[….] staring up at the tall buildings whose smooth glossy sides reflect clouds—the din of traffic all around him, the mysterious words of unknown languages, strange music—Stan would feel like some kids in a fairy tale, a kid who'd been asleep inside a mountain for a hundred years and then woken in some foreign, unfamiliar land. (21.8)
While we can't condone his attitude, insofar as coming back to the place where you grew up and finding it overtaken by businesses and people you don't recognize has to be pretty hard, we feel a tiny bit badly for Stan here. But again, racism is never cool.
Now it was Marigold's voice he heard in his ear, Marigold on what he always thought of as the Night of the Chooks' Feet—May's birthday, when Marigold had taken them to a big Chinese restaurant in town. She'd ordered the Banquet. Stan's fork—he'd refused the chopsticks—had hovered over his bowl. "But they're feet!" he'd protested. "Something's feet. I'm not eating feet!" (23.4)
Ever eat at a foreign restaurant and try something that just sounded bizarre, like snails, caviar, or frog legs? Sometimes it's fun, sometimes it's kind of gross. In the case of Stan's experience, though, his refusal to eat feet or use chopsticks seems to point to fear of the different or unknown. Unfortunately, this fear translates not just to cultural traditions, but people from different cultures as well.
[Rose] wasn't born yesterday. The kind of childish insult Rose remembered from her primary school because all the kids back then thought if you were Chinese, you ate cats […] Well, that was then and this was now, and the old bigot wasn't going to get away with it! She'd had enough: this was the twenty-first century, and she should be able to stroke a cat like anyone else, without having some backward old fool suggesting she was sizing it up for dinner. (23.35)
Ouch. We know Stan didn't meant to say, "Watch out, puss!" out loud, but getting an inside look at Rose's reaction shows how hurtful racist remarks can be when you're on the receiving end of them.
They both laughed, and [Rose] handed him the checked hanky so he too could wipe his eyes, and Stan had the definite feeling that he'd made a friend. (23.78)
It's really awesome how Rose chases after Stan out of anger with his cat remark, but by the end of the conversation, they end up being buddies. Their mutual problems with children appear to be larger than any culture differences between them.
Clara wanted to come to Nan's party. And Clara was Chinese, and well, not to put too fine a point on it, was Pop a racist? […] Dimly he remembered Nan once telling him how Pop had refused to go to the new dentist, Dr. Tsai. Was that because Dr. Tsai was Chinese? (30.23)
Nan offers a different, non-racist explanation for Pop's refusal to see Dr. Tsai: He's embarrassed of his bad teeth. Still, it's not really enough to make Lonnie dismiss Lily's charges of racism. It's hard to know for sure which one of them is right, especially considering the story's positive outcome.
"You must be Clara's mum," said Jessaline, and then she wished she hadn't because the only way she could have known this was because the lady was Chinese. And that was sort of racist, wasn't it? (32.17)
Jessaline's assumption may have been in poor taste, but Rose handles it gracefully and seems to know that she means well. After all, who hasn't made a social faux pas at one point or another?
Pop was prehistoric in that way; he knew all these awful racist jokes, and he told them too, without even noticing that nobody else was laughing […] The very best you could say about Pop was that he was in severe bad taste. (34.2)
In the end, Pop's racist attitudes are probably not the result of malice; they're probably a mix of growing up in a time when people from Asian nations were erroneously perceived as "less" because of military situations and other social factors. The awesome part, though, is that he overcomes it. We're pretty sure you cheered a little when Pop meets Lonnie and Clara at the train station and kisses her on the cheek.