It's so awkward when someone makes racist jokes against their own race 😅

They say racist jokes are only acceptable when they're about your own race. But what if one is cracking said jokes around people of a different race? Is it offensive for them to laugh at it? I have an Asian co-worker and every now and then, he'll go and make racist jokes against Asians. Bad ones, in the sense that if it were anyone who wasn't Asian saying it, it would be nothing but offensive! He doesn't care if anyone at work laughs, but it still feels awkward even with his approval, if you will. I can't help but imagine other Asian people laughing at it, but then glaring at the one white person laughing too like "Why are you laughing?" 😬