I think we need to break this down so we can have a concise way of describing this to people in the future as it is quite complex and contradictory.
There are a few angles with which to approach it and I think the most convenient (to use the old Taiwan axiom) way would be to break it down between intent (on the part of the local) and perception (on the part of the foreigner).
1 - Use of the words ‘waiguoren’, ‘laowai’ and ‘adogah’ immediately upon any dealings locals have with foreigners. Almost always, it is the first word out of their mouth. Also, lets pretend these words are of the same degree of insult for the sake of simplification (obviously ‘adogah’ is the worse but lets not open that can of worms).
perception: exclusionary, racist, uncouth, bigoted, and just plain rude.
intent: special case, not run of the mill, caution bumpy road ahead.
I fucking hate it when this happens, I speak Chinese, I know a thing or two about the ways of this Isle, why the fuck you always gotta dumb me down and single me out. But the longer I live here the more I realize that people here often behave like system analysts and not outside the box thinkers. They are just reporting on what they observe, almost in the same way that men flirt with women here by pointing out their flaws, locals deal with foreigners first and foremost by pointing out their ‘foreigness’. Perhaps it is to pre-excuse a potentially face losing situation, perhaps it is to warn others things could get awkward.
Is it racist? Absolutely, it is actually textbook racism.
Is it meant to be hurtful? I doubt it, people here are often focused on their own reality and haven’t given thought to your plight, and even if they did, many wouldn’t understand it.
Are foreigners too easily butthurt? yes, but it is because most of us (the Western ones, what the SE Asians go through is much rougher) come from a multicultural society and have been indoctrinated from youth to have racial and cultural empathy (though many choose to act out against this ideology, as I feel more and more people here will in the future as outsiders, especially Vietnamese, become full fledged members of society). People here have not been brought up with multi-culturalism, and when questioned on the matter think: “What? He is a foreigner, he isn’t from here, he is different than me, what exactly am I saying or doing that is false?”
To locals this perceived indignation is non-existent, and nothing more than someone being pragmatic, not hurtful, but the reality is to any foreigner living here it is a true barrier, and a fundamental building block to exclusionary behavior and clannishness in the future. I always think about issues like this when I hear complaints being lodge by Asian anti-defamation groups in the US, if they only know the other side of the coin…
I will add other scenarios later, feel free to add more or comment.