I ve never spoken with a person who used Nips in a conversation. But I have heard it used in many WWII documentaries like on history channel . Not by the people telling the narrative of the film , but as reporters were filmed live interviewing solders in the Pacific theater . But , some very very old government info movies about battles , and tactics use strong slurs of enemy countries.
I thought Nip was short slang for Nipponese person . Never thought too much about it one way or the other . Only time I heard it used is on TV history replay of 75 year war old reporting . Maybe Archie Bunker ?