When I first came back to China in the late 1990s, my friends advised me to refrain from the practice, then habitual only among new returnees. I explained to them that Chinese people in America insert English words in otherwise Chinese conversations not to show off, but as a necessity, because it is more practical to retain the original English for proper nouns than to transliterate them into Chinese homonyms. By no means does it speak to one's English proficiency or even preference, I said.
But in the past decade and half, things have developed in interesting ways.
The ubiquity of English learning among the Chinese population, or rather, the urban young, has triggered an avalanche of unintended humor. Phrases like "people mountain, people sea" and "seven up, eight down", which are verbatim translations from Chinese, float like golden fish among certain crowds. The recent inclusion of "no zuo, no die" in the Urban Dictionary, a Web-based slang dictionary that contains 7 million entries, is seen in China as a confirmation of the practice.
Honestly, I do not think most of these Chinese-flavored terms are able to cross over from expatriate communities in Chinese metropolises into North America or Europe. And they would probably bring no more than a chuckle, if not a blank stare.
Whether you think this is tainting the purity of English or enlarging the sway of Chinese, I believe it is quite innocuous. The real adverse effect of a great number of people learning a little English is the illusion that you can turn to anyone for a job that only well-trained professionals can perform. Bad English is so widespread in China that some signage in big cities has started to draw Westerner tourists.
When I hear accusations that Chinese tend to be rude when talking to foreigners, I come to the defense by saying that much of the fault should be attributed to language ability, or lack thereof.