Oh, the Chinese definitely don't see it that way. I'm sure my Chinese name is laowai because that is what I'm called everywhere.
I'm neither a citizen, nor a permanent resident. The Chinese don't hand out greencards easily (maybe a few hundred a year) and even then often only to people of Chinese descent.
So... I earn RMB and live in China... but I'm totally a foreigner. In fact, foreigners can't really become permanent residents of China, especially if you're not of Chinese descent.
>Foreigner may refer to: Alien (law), a person in a country who is not a citizen or permanent resident of that country.[1]
If someone earns RMB and lives in China, then presumably they're either a citizen or a permanent resident.
[0] https://en.wikipedia.org/wiki/Principle_of_charity
[1] https://en.wikipedia.org/wiki/Foreigner