You have the right to be angry, I would too. I am a Chinese-American and speak fluent Putonghua, but the moment I open my mouth and the vendors hear that I'm not a local, they jack up the price even though I know exact how much I should pay. I would say, I bought this for x amount from another vendor last week and they try to "convince" me that I bought a different product last time or their product is somehow superior. It is only after I walk away do they chase after me to give me my price. So what I do now is speak some Kunminghua so they know I've been here a while and don't try to rip me off too much.
The point of the story, asking for more is not racism in China, its the product of 5000 year of haggling, its an tradition. In fact, in some places both vendors and customers alike will get upset if you don't haggle. In Kunming I work both in administration doing translations and such as well as teach English so let me shed some light as to the mindset of the Uni admins and hopefully clear up the perceived racism.
China is currently trying to develop the western region, KM being part of that. Part of the strategy is to increase trade with SE Asia, since Yunnan borders so many SEA countries, it is the central focus, (hence the building a railway connecting KM to Vietnam, Thailand, and Malaysia). It is a policy to attract SEA countries to become vested in China and offering lower fees is part of that. Another consideration is that SEA countries are poor. If they charge the same higher fees then there would be fewer students. At the end of the day, the extra 200+ euros you pay isn't going to break your bank, but for these Vietnamese, Thai, etc students 200 euros can feed a family for several months.
It is normal practice for policies to favor one group of people at the expense of another in any country. As an American Passport holder, if I want to study in Europe, I just book a flight and enroll, or fill out some simple paperwork and I'm done. My colleagues with an Chinese Passport on the other hand, must submit bank statements, affidavits, and endure a grilling interview and often get denied without explanation. It is racism? No, it is because China has a reputation for illegal immigrants and the US doesn't. Just as it is perceived in China that Europeans and Americans are all very rich and if you come here to study then you must be rich since you can afford the plane ticket back and forth. Is it fair, no. Is it racist, definitely not.
In regards to foreign Unis, they most definitely discriminate against foreign students because Unis, after all, is in the business of making money in case you forgot. In my uni for example, it is publicly stated that foreign students pay an amount that is 3-4times more than what I paid. Would it make you feel better if they had a notice on the door that says White foreigners pay one price while SEA foreigners pay a lower price and strictly adhere to that policy?
Bottom line, Yunnan for all its beauty is still considered backwards in a backwards country. There hasn't been much interaction in Yunnan with white foreigners other than as tourists while SEA countries has been coming here for study or business or smuggling far longer then there has been a foreign presence. I agree that there is most defiantly discrimination here and in fact quite often the moment I whip out my passport they try to give me the "American" price. But discrimination does not equal racism.
I agree that a lot of these people are slimy and greedy and I've had my fair share of them but that's how it is here in Yunnan. You have to learn how to deal with them. If this upsets you then you can go to a much more foreign friendly city like Beijing or Shanghai. There, they charge all foreign students regardless of race the same high price that is likely more than the 5800 you are paying now. Or perhaps, you can learn Chinese in a European city where they charge everyone the same amount of Euros.
Anyway, this has been a long post, hopefully this clear things up. Please don't blame things on racism unless you've seen what racism really is.