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Chapter 1 - Introduction
Research Background
Since Tsai Ing-wen and her Democratic Progressive Party (DPP) were swept into office in 2016, Taipei’s relations with Beijing have cooled (Grossman, 2016). A common trope in the media is that due to increasing tensions, there has been a decrease in the number of visitors to Taiwan from the Mainland, reversing a nearly decade-long trend of increasing amounts of Mainland Chinese tourists traveling across the Strait (Tourism Bureau - Table 1).
Table 1
Mainland Chinese Visitor Arrivals to Taiwan - 2007-2016
Year Number of Visitors
2007 0
2008 329,204
2009 972,123
2010 1,630,735
2011 1,784,185
2012 2,586,428
2013 2,874,702
2014 3,987,152
2015 4,184,102
2016 3,511,734
Source: Tourism Bureau, 2016 -
http://admin.taiwan.net.tw/statistics/release_en.aspx?no=7
In 2008, the ROC and PRC governments met to discuss the “Three Links” - policies that worked to bring Taiwan and China closer in terms of trade and travel. Part of the
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discussion was that of tourism; for the first time since 1949 it became possible for Mainland Chinese to visit Taiwan for the simple purpose of travel. In the first year alone, more than a quarter million Mainlanders crossed the Strait, with numbers growing each subsequent year, peaking at over 4 million in 2015 (Tourism Bureau, 2016).
The administration of ROC President Ma Yingjeou (2008-2016) had been largely conciliatory towards Beijing but, at least towards the end of his second term, widely
unpopular in Taiwan, partly due to his administration’s China-friendly posture. Tsai and her DPP was subsequently elected on a wave of discontent regarding closer China ties, thus her administration and the DPP-run government were handed a mandate to step back relative to Beijing (Bush, 2016).
Almost immediately after Tsai’s inauguration, there was a drop in the number of Chinese visitors. The implication is that tourist numbers have begun to fall due to Beijing’s disapproval of Taiwan’s new political direction (Jennings, 2016). Regardless of the
underlying reasons (and those will be discussed), there is some fear in Taiwan that a significant drop in tourist revenue could spell profound difficulty for the island’s tourism industry (Smith, 2016). A range of businesses and workers engage in Taiwan’s tourism industry, and with Chinese tourists being the most significant group, these businesses and workers stand to lose. Businesses include hotels, transportation and bus companies, restaurants, gift shops, larger retailers like department stores, and through them local governments due to tax revenue. And while these businesses will lose money, the workers who keep these businesses running will be the first and perhaps most significantly affected - drivers, food servers, store clerks, housekeepers, a huge range of skilled and unskilled professionals will feel the squeeze. Mainland Chinese visitors spend the second most of any national group, with only Japan spending more (Tourism Bureau, 2016). Calling Chinese tourists the “second highest” spenders is almost misleading - they, on average, only spend
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one cent USD per day less than their Japanese counterparts. This fact is incredibly significant as Mainland Chinese visitors made up more than 47% of all tourists to Taiwan (Tourism Bureau Data, 2016). Clearly, a significant drop in visitors from China could mean serious trouble for tourism in Taiwan.
However, the underlying fear of what comes next is perhaps more significant than the decimation of Taiwan’s tourism industry. Tourism is a drop in the bucket in terms of
Taiwan’s total economy, and should it fall apart, Taiwan at large would hardly notice. The underlying fear of Beijing limiting the amount of tourists allowed to visit Taiwan is that it could be a sign of a willingness to hit Taipei economically when the ROC acts against Beijing’s interests. Tourism may be a small part of Taiwan’s economy, but Taiwan’s economy has become profoundly intertwined with China’s, and if Beijing is willing to
“punish” Taipei through tourism, perhaps they are increasingly willing to do so through other economic means. Furthermore, Taiwan’s economy is much smaller and much more
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dependent on the Mainland than China is on Taiwan. Since the opening up of relations between China and Taiwan, Taiwan has become increasingly reliant on Chinese labor, resources, investment, and legal structures. If Beijing were to punish Taipei economically, it could be potentially catastrophic for an already slow Taiwanese economy. In other words, Taiwan rightly worries that a slowing of tourism could be the first sign of greater economic pressure on behalf of Beijing, a pressure that could cause serious damage in Taiwan. As such, this study will analyze the state of economic relations between Beijing and Taipei, as well as the interplay with the political situation across the Strait.
Research Purpose and Question
Tourism may not be a centerpiece of Taiwan’s economy, but that does not mean it should be ignored. $14 billion in income (Tourism Bureau, 2016) is a large amount of money and the people who make a living in tourism could find themselves in a difficult position should Chinese tourist money dry up. To illustrate its importance, in September 2016 workers in Taiwan’s tourism industry held a protest in Taipei demanding the Tsai Administration change its tune so as to ensure the arrival of ever more Mainland visitors (Cheng & Wu, 2016).
However, the money might not be the most important factor. Tourism is an important form of contact between peoples. If Taiwan loses 47% of its tourists, which would mean more than half of its tourism income, its travel-related industries, including restaurants, hotels, transportation companies, and gift shops, would close en masse. In turn Taiwan would become a less desirable travel destination for other types of tourists. Taiwan would miss out on informal people-to-people exchanges, first with Chinese, then with people from
everywhere else. This would be a problem - Taiwan already lacks international visibility, and if it wants to chart its own course, whether by getting closer to China or by moving towards
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independence, that visibility is critical, as it ensures other nations are both aware of Taiwan’s plight and empathetic to Taiwan’s ends. Without a robust tourism sector, who will bother to visit Taiwan? Understanding the importance of tourism and its dynamics is a central theme of this work.
Another purpose behind the research is that the issue is topical and it opens the door to a more important conversation: how China could harm Taiwan economically. As
mentioned, the issue of Chinese tourism is common in Taiwanese media, and strikingly frequent in Western news. Furthermore, and as mentioned, Chinese tourism in Taiwan is related to the larger and more significant issue of China-Taiwan economic relations, and how those relations may come into play especially during a time of rising tensions. Having a clear and accessible understanding of a relatively complicated issue can only help in both the academic and informal discourse surrounding the circumstances.
For these reasons, this thesis seeks to understand the following: what is the impact of changing levels of tourists from China on Taiwan’s economy, and what does it mean for China-Taiwan relations? Encompassed in this line of inquiry are a few other minor questions that will be explored, like what is the contribution of Mainland tourism to Taiwan, and how much of money spent by Mainland tourists stays in Taiwan, rather than going to Mainland or Hong Kong owned businesses? Also, what will be the impact of a reduction in Chinese visitors to Taiwan, and is Beijing behind that reduction, or is it caused by other factors?
Finally, this analysis will address how Taiwan should respond to a reduction in Mainland visitors.
Research Method
The methods used to collect information and analyze it are essentially twofold. This thesis is qualitative research done through review of available literature regarding Taiwan and
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China’s economic relationship and interdependence, in conjunction with examination of government data and other academic, government, and journalistic sources for information specifically regarding tourism. A qualitative approach is particularly useful for this study, as I am seeking to establish the effects of Chinese tourism in Taiwan and why it functions the way it does. This means examining the question from a political and human perspective rather than a data driven one. Furthermore, a useful quantitative analysis of my research question would mean a tremendous amount of research that in the end could only reveal trends, and controlling for separate factors would be nigh impossible. A literature review and qualitative analysis can produce similarly efficacious results much more efficiently.
For the literature review, I began with a number of academic texts and reviewed them for similar themes and contrasting conclusions. As readers will find, the preliminary literature review revealed that much thinking on the economic relationship between Beijing and Taipei is in agreement, especially in terms of the motivations underpinning that relationship and the degree to which it has had an effect on the economies and societies on both sides of the Strait.
There was, however, little prediction regarding what the effects of the economic relationship, especially regarding the future of political relations and how trade and economic interaction will affect them.
In regards to other sources of information, these are used to extrapolate information specifically regarding tourism to examine whether or not tourism fits the same political and economic patterns as Cross-Strait trade in general. This information, including data from the Taiwan Tourism Bureau, analyses from international think-tanks, and news articles, will determine firm numbers regarding Mainland tourism in Taiwan, what the possible impacts of a decrease in visitors could mean, and how Taiwan might possibly address this decline in tourism revenue. These sources come from a range of media and perspectives, and work to illuminate specifics that the academic literature on China-Taiwan economic relations simply
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has not addressed. I also cite a number of web databases and articles from sources that include the CIA World Factbook and Center for Foreign Policy. This information is useful in establishing foundational arguments, e.g., the dollar amount of trade across the Strait, as well as basic analysis of short-term trends. Moving further, news sources are also referenced.
These will help in supporting the analysis of this thesis and act as a source of data as well.
In addition to the aforementioned sources of information, expert interviews help to firmly establish the state of Mainland Chinese tourism in Taiwan. I spoke with five experts, ranging from trade association directors to hotel managers to politicians. These individuals shared their deep expertise and opinion’s regarding the state of Taiwan’s tourism industry, as well as their concerns and predictions for the future and why they hold the views they do.
Their input is included throughout this thesis, especially in Chapters three and four, but specific notes about what was asked and their responses are contained in the appendix section near the end of this paper.
Limitations
Every effort to produce an illuminating and useful work has been taken in researching and writing this thesis. However, there are certainly some limitations to this examination. As stated in the introduction, it is a qualitative review, largely compiled through literature and expert opinion and drawing conclusions from these sources. This is not necessarily a
limitation, as expert opinion and the literature available are in many ways more reliable than an amateur effort at quantification. Still, quantitative analysis, especially of survey
information and official tourism figures would be a tremendous addition to the conversation.
The problem is, such a project would be at the very least a multi-year, team-led project, and at most simply impossible. In other words, it would be a difficult project even for a
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government-funded group of social science professors to tackle, much less as a Master’s thesis project.
Another limitation is a relative lack of information. While literature regarding Cross-Strait relations, economics, and trade is abundant, information about Mainland Chinese tourism in Taiwan is rather limited. First, there is information that no one knows, including the details regarding the exact decision-making process in the PRC to clamp down on tourist numbers to Taiwan. No one I spoke to had any definite information, and none of the news sources I examined had anything more than rumors and secondhand accounts. Also, as mentioned previously, there is a lack of quantitative data beyond what the Tourism Bureau is willing to provide. The Tourism Bureau was unwilling to respond to my inquiries, as were local tourism boards. Another reason is that information available, especially English
language articles and literature, are clearly politicized and show an intent to persuade readers to agree with a given position. This implies a degree of cherry-picking and necessitates healthy skepticism in at least a few sources.
The degree of politicization of the tourism issue deserves special attention, as it is probably at the core of why the Tourism Bureau and other bodies are reluctant to provide information beyond official data and basic analyses released on their website. As mentioned in Chapter 4, how individuals regard Mainland Chinese tourists is related to their positions on the China-Taiwan political relationship, specifically whether or not Taiwan is, is not, or should be a part of China. Most sources, including interviewees and newspapers, deny having a political bend, but their perspectives at least slightly betray their leanings. This is not to say that having an opinion towards Mainland Chinese tourists and tourism precludes anyone from offering good information, it just increases the likelihood of cherry-picked information.
Finally, there is a stark lack of quality English information available regarding
Mainland Chinese tourism in Taiwan. There are a few quality researchers out there, including
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Professor Rowan at Academia Sinica, and there have been strong articles written about it.
However, there is a torrent of relatively low-quality speculation and rehashed ideas that make sifting through and finding quality information difficult. There is, obviously, much more Chinese language information, but, sadly, my Mandarin skills are not up to the task of translating from and analyzing Chinese language sources. Still, this is part of why I selected this topic - there needs to be more information available to the international community considering the pertinence of the Chinese tourism issue.
Beyond these limitations, a final issue with this work is its relatively small scale. This study was undertaken during a relatively brief period, with initial research beginning in the spring of 2016 and seeing completion summer of 2017 - a time period in which there was tremendous flux in tourism trends and probably only just the beginning of a transition away from Mainland tourists. Furthermore, I did not select the specific topic of this thesis until early 2017. With more time, more support, and more resources, this study could be expanded and honed. And while the research includes four expert interviews, a literature review, and an analysis of relevant media, there is room for more interviews and the contribution of Chinese sources. However, I am also confident that should the study be refined and extended, the conclusions will not change and its findings will be very similar to those seen here.
Chapter Structure
The structure of this thesis is as follows: Chapter 1 opens with an introduction to the topic of Mainland Chinese tourism in Taiwan, as well as an explanation of the project’s rationale and research questions. Research methods are also explained, followed by potential limitations of the study.
Chapter 2 is a review of available literature, especially regarding Cross-Strait
economic relations. The first section explores economic relations between China and Taiwan,
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followed by the more specific economic issues relevant to China-Taiwan trade and
investment. This is the framework on which the project is based. Finally, literature regarding Mainland Chinese Tourism in Taiwan is discussed, with further discussion of expert
interviews used to further explore the nature of the changes occurring.
Chapter 3 delves into the history and background of Mainland Chinese tourism in Taiwan, with a brief recollection of China-Taiwan relations especially since the late 1980s, followed by progress towards the goal of direct flights filled with tourists to Taiwan. The next section discusses the “pros and cons” of Mainland Chinese tourism in Taiwan, including the economic benefits and the social costs of the structure of the market. Chapter 3 ends with an assessment of the current state of Mainland Chinese tourism in Taiwan, and what these trends may mean for the tourism sector.
Chapter 4 relates Mainland Chinese tourism back to the larger economic issues, and establishes the possibility of a correlational link between tourism trends and trade and
investment across the Strait. The chapter ends with some predictions as to the state of tourism Taiwan’s tourism sector in the near- to mid-term, along with some extrapolations about what it could mean for the overall economic relationship between Beijing and Taipei.
Chapter 5 concludes this thesis with a summary of the work and findings, followed by a policy recommendation of greater diversification, especially in Taiwan’s tourism sector.
This section is supported by a brief case study of how Taiwan could engage the relatively untapped Western market as an example of actions the government and businesses need to undertake to keep Taiwan’s tourism afloat.
The appendix is simply a notated summary of the expert interviews conducted, followed by the references section.