I don't even try "blending in" why would I even bother? I am not trying to pass myself off as being ethnically Chinese. Neither does my wife yet she is just another local who isn't Chinese. I am just another normal chap on the street, living his life quite happily, just as other locals do. Of course people who don't know me are very surprised when I tell them I have ROC nationality when they ask what nationality I have. It's not shocking to them, just unusual.
But when I tell a foreigner who doesn't know my I'm a citizen here they often get all grumpy and upset that I would make up such a shit faced bold lie. That's usually when they ask to see my ID card and I refuse, and they then go on to make a bet with me that I dont have local citizenship.
I like that type of betting. I've won a fair bit of money doing that.
I do business with a many local companies, and the staff are always friendly and speak to me in Mandarin. They don't start by speaking English to me. Some staff in the bank foreign exchange departments have, but it's out of courtesy and the bank want staff who can speak to expats in English, and once I start talking in Chinese they don't switch back to English again.
The locals don't have a fear of foreigners, what they fear is the embarrassment that they might not be able to communicate with a foreinger if that foreigner doesn't speak Chinese and if they cannot speak English.