But he [is] a Jew, which is one inwardly; and circumcision [is that] of the heart, in the spirit, [and] not in the letter; whose praise [is] not of men, but of God.
Note 2 at Ro 2:29: This is a remarkable statement. Paul was saying that those who have been born again through faith in Jesus have been circumcised in their hearts (Col 2:11-12) and are the true Jews. They aren't Jews in nationality or religion, but they are the true people of God. Paul dealt with this in more detail in Ro 9 and clearly made a case that Gentiles who are united with Christ in the new birth are now God's people. Paul made the same point in Ga 3, saying that those who are saved through faith in Jesus are now Abraham's seed and heirs according to the promise (Ga 3:16, 22, and 26-29). This leaves no doubt that the church is now God's chosen people on earth.
This does not mean that God has forsaken the Jews. Paul dealt with that issue in Ro 9. There are still prophecies that apply to the physical nation of Israel, and they will be fulfilled. However, the New Testament church, composed of Jews and Gentiles, is now God's kingdom on earth.
Note 3 at Ro 2:29: Paul's statement here definitely places the spirit in the heart of man. This has led some to believe that the heart and spirit are the same. However, 1Pe 3:4 refers to the spirit of man as the hidden man of the heart, implying that the spirit comprises only a part of the heart. The heart of man is actually made up of two parts: The soul and the spirit. This is the reason the Scripture speaks of having two minds in our hearts (Jas 4:8) and why we must believe with all our hearts (Ac 8:37), not just a part (see note 3 at Mt 12:34).
Note 4 at Ro 2:29: The Greek word that is used here for "letter" is "GRAMMA" and literally means "a writing, i.e. a letter, note, epistle, book, etc." (Strong's Concordance). Paul was saying that circumcision is spiritual rather than natural. True circumcision is a born-again nature and not a mark in the flesh.