It's a mix between the pinyin system being super confusing since all the freaking words are spelled the same... and their learn of pinyin to be a one way street. First part is pretty self explanatory so I'll elaborate on the second. They are taught to just inhale the information that is given to them, not to think; which makes it real hard to learn outside the box. So when dealing with pinyin, they only have to translate to pinyin, not vice versa.

Think of it like sheet music. Many people can look at sheet music and play the notes. But very few of those can actually listen to the music and write down what they hear.

The use of pinyin as a teaching tool trails off at about grade three, and practically vanishes by middle school (save the teacher telling them the pronunciation of an obscure character here or there). So the last time they really had to read pinyin they were still prepubescent.

Pinyin isn't really much of a use. On a lot of buildings, you'll see it WITHOUT tones, so it only gives you a general idea of how to pronounce it.

Also, since there are often multiple meanings for each spoken word, you really need to understand the context in speaking to understand what is being said. Written this would be impossible with a language that has such a limited vocabulary, even with tones. Remember, there are only 400 sounds in Chinese x 4 tones = just over 1600 "sounds".

There is a stroke based system on both computer and mobile phone based technologies. Not everybody uses pinyin nor are required to. Chinese characters are the official reading system here.