What does the saying Chinese Japanese dirty knees what are these mean?

This is a children's rhyme from the 1970's, often heard on playgrounds.

Although it has racially mocking and sexual overtones and is likely considered racist and sexist by anyone hearing it today, it wasn't always used in that context- at times it was surely as meaningless to the kids singing it as the "Ring Around the Rosie" song (Bubonic Plague- look it up).

The line was also used in Rob Zombie's movie "Devil's Rejects", very likely solely because it is considered offensive today.

To the superoctobe:

My friend's are saying that all because they hate Japanese and Chinese people. some guy made that up for races children.