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Q: Why do a lot of Chinese people (not all) think that expats/foreigners have poor language skills?
This is a serious question. I have only been in China for four months, and so I probably do not understand the Chinese psyche as some of the users here. I have however been married to a Chinese Lady for over 4 years in the UK, and have subsequently moved here for a couple of years.
I have noticed that a lot of Chinese people act surprised, when they hear me speaking chinese (although I consider it quite rudimentary). Replies such as "Why do you speak Chinese?", "You can understand what I am saying", "I thought foreigners could not speak chinese, because it is too difficult", or gestures such as a blank quizzical look/stare/open mouth. Sometimes I will just say back "Because I am in China". I often get this more from teenage to 30 something males, rather than females, which is ironic because most of these chaps when saying (a mocking??) "Hello", sound like something from a Scooby-Doo cartoon.
So Why is this? - I do not want to read 没有为什么 though - I hear that everyday as well. !!!!
From my experience Chinese tend to assume that foreigners are either completely fluent and understand everything or are completely clueless and can't understand a single word. A lot of locals are quite ignorant about the outside world and assume that "foreigner speaks foreign language" or they just assume that everyone understands Chinese because we're in China. Taxi drivers often get confused when they ask if I can speak Chinese and I say "a little". We might chat for a few minutes about very basic topics and then the driver is convinced I'm fluent which is not even close to true.
27pence:
I have noticed this as well. Outside of family, friends and colleagues, people will either talk to you, with what I assume to be colloquialisms, and quite quickly, OR they will not say anything at all - and assume I can not understand anything.
Because Chinese people think that only Chinese people can speak Chinese, and they also think that they are the masters of English for learning it in school for 10+ years despite not being able to say much other than "hallooo".
laowaigentleman:
I learned German for four years and I can speak it much better than many people who've learned English here for 10 plus years can speak English.
It's because they just rote learn and recite to pass exams that aren't worth the paper they're printed on.
Yeah... because they take pride in thinking that Chinese is difficult and the foolish foreigners can not learn it. When you do speak it (at all) they will usually compliment you and say your Chinese is so AMAZING! They are being a little patronizing but honestly, they are just happy and surprised you can speak any Chinese.
They like to think like this because they are very insecure about their English. A lot of them have learned it in school for many years but can barely use it at all. Chinese is extremely difficult to learn to use properly but it gets easier fast...
It also depends who you run into and which part of China (some people are bigger asses in different parts). Some Chinese will even pretend they can't understand you, even when you are speaking perfect Chinese... the color of your skin somehow blocks their ear holes. 
dongbeiren:
I love when saying hello or thank you gets me a compliment on how good my Chinese is.... maybe it's because I actually use the proper tones but it's pretty funny.
They love to flatter themselves by thinking Chinese is the hardest language in the world and a foreigner could never speak fluent Chinese. Similar to how they think a foreigner can never properly understand China...
27pence:
To be honest Chinese is difficult to learn at first. i have found over time that it does get easier. I am in Guangdong province, and my wive is Cantonese. So for just over the six years she was in the UK with me (I met her at a British University, when we were doing our PhDs), she only really used cantonese when using skype to talk with family and friends. So I am in the position of understanding more cantonese than mandarin that I can speak.
So sometimes I will reply to somebody who has said something in Cantonese (expecting me not to know what they are saying maybe) with mandarin, and the look on their faces has gone from being quite amusing to extremely boring now.
It's a mixed bag of ignorance of the outside world, and being trained very early to trust what other says rather thinking by yourself. Somebody said that Mandarin was hard to learn and that foreigner have a hard time to get it : it stuck, maybe because it reinforce some kind of exceptionalism, it's reassuring.
I don't think Mandarin is that hard, 4 tones is not that much and the grammar is fairly logical. Also, Mandarin is tolerant to swapped words in sentences. Try this in romance, slavic or germanic languages... Other Asian languages have the same basic structure. Chinese sounds have some gotchas (like for saying 4, 10 and 'eat'), but living in China for a couple of weeks can fix that. The writing system, hum, yes, that's challenging if you are used to have an alphabet.
As other mentioned, people will assume you don't understand anything, and then, when you show that you have some vocabulary and can put a short sentence together, they seems to assume you are fluent. I think that's normal, people who never tried to learn a language can't grasp the idea of gradual fluency. Maybe an other factor is that people here often assume white people speaks one language. Some baby-boomer from Western countries are guilty of being less likely to know a 2nd language, and it became a stereotype.
没有为什么
Robk:
When they say that I usually respond with (can't type hanzi on this comp)
"zong shi you wei shen me, dan ni zhi bu zhi dao."
"There is always a why/reason, but you just don't know."
most Chinese people i meet assume that:
1) I am American
2) i can't speak anything other than English
whereas i enlighten them about being:
1) European
2) able to speak 2 other European languages
3) my listening in Chinese is good but my speaking is not so good
4) i am not particularly good at learning a new language - it takes time
After they get over the first shock, the following ones leave them dumb-founded.
Many can not comprehend each persons different ability to acquire languages
"wow you are sooooooo clever" 
Broad stereotypes are a part of it. All "foreigners" are from "Waiguo" (or, as they call it in Waiguohua, "America"). Typically, Americans don't learn Mandarin in school (Spanish has typically been most popular), and since all Waiguoren are Americans, then all Waiguoren never learned Mandain.
There's also some instance of arrogance, as BIll mentioned. Chinese have often told me, with no small sense of pride, that Mandarin is too hard and complicated. Like chopsticks, the primitive, foreign brain can not wrap itself around such complexity.
There have been some good points made by OP and others here but I still can't shake the feeling that this discussion was created by someone who wanted to blow smoke up his own arse about how great he thinks his Chinese is. Meh!
27pence:
The problem is my Mandarin and Cantonese are not that great - and I am fully aware of this. But a lot of Chinese have met act like it is - which I have found to be quite weird.
Because they are dumb.
Today again, noon, at a restaurant, walk in, some people at the table next to mine start talking about the foreigner thinking that I don't understand them.
That pretty waitress walk to my table, I order then have a quick chat with her, all in fluent putonghua, then get her phone number plus wechat by the way, like a boss.
People at the next table immediately try to chat with me. I tell them to mind their own business and next time they see a foreigner to not automatically assume that he can't understand Chinese.
Most people in China are incredibly ignorant and racially biased, it doesn't make me angry, I laugh at their stupidity.
