"The oldest attestation of Hua 華 as a self-designation is among the ruling class of the feudal state of Zhao 趙. .... Except perhaps to aged and highly cultured members of the Zhao elite, no one was aware anymore that Hua 華 had entered Chinese as a loanword, moreover one that designated a foreign nation. Thus, it finally came to mean “we, the Chinese”. It still has that meaning today, along with Zhong, “middle”, from Zhongguo, “the Middle Kingdom, China”. We still see the two together in Zhonghua Minguo 中華民國, “Republic of China”, and Zhonghua Renmin Gongheguo, 中華人民共和國, “People’s Republic of China”. The origin of the words Xia 夏 and Hua 華 is the collective self-designation of the inhabitants of Bactria, a country of which the Greeks rendered the Iranian name as Ariana. ... At any rate, the Iranians came to boast of their Aiirya-ness... It is with this elitist connotation that the word also came to mean “us, Chinese”, whence developed the meaning “the Chinese”. And so, in the state of Zhao and later in all of China, the character Xia also acquired the meaning of “grandeur (in manners)”, “courtly sense of ceremony”, while the character Hua also came to mean “splendid”, “excellent”. As a name for the Chinese people, Hua is unapologetic in its claim to superiority... So, the same word came to designate the ethnic specificity of Afghanistan, Iran, North India and China. The unexpected commonality between India and China is reflected in Tibetan. There, the word for the Chinese is Rgya, from Hua, from Ᾱrya; for India it is Rgyagar, apparently from Ᾱryavarta. At any rate, most of Asia called itself Ᾱrya at one time. Here we are reminded of the Manu Smṛti, in which it is said that even the Greeks and the Chinese (both of whom the Indians met in Bactria) had once been Ᾱrya, but had lapsed from that status due to a lapse from Dharmic norms, a barbarian-type conduct. Manu was not much of a historian, but at least he was right in seeing something Ᾱrya in the Chinese. For us, then, this glimpse into the strange itinerary of the term Ᾱrya is a healthy exposure to the relativity of core Vedic vocabulary."
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Elst, Koenraad (2018). Still no trace of an Aryan invasion: A collection on Indo-European origins. The Chinese self-designation Hua and the root-word Ᾱrya
https://en.wikiquote.org/wiki/Chinese_people
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