And the rate of intermarriage has grown dramatically in recent years: according to the Jewish Databank, the rate of intermarriage has risen from 13% in 1970 to 47% since 1996, though the rate of intermarriage seems to have stopped increasing.
One Orthodox Jew I know went so far as to state that intermarriage is accomplishing what Hitler could not: the destruction of the Jewish people.
Although we refer to ourselves as G-d's chosen people, we do not believe that G-d chose the Jews because of any inherent superiority.
According to the Talmud (Avodah Zarah 2b), G-d offered the Torah to all the nations of the earth, and the Jews were the only ones who accepted it.
The 613 mitzvot of the Torah, on the other hand, are only binding on the descendants of those who accepted the commandments at Sinai and upon those who take on the yoke of the commandments voluntarily (by conversion).