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Mar. 10, 2015 - Updated 04:16 UTC

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Trouble for Taiwan's Tourism Trade

May 24, 2016

Beijing started applying pressure on Taiwan before Tsai Ing-wen was inaugurated as president last week, and that pressure appears to be already taking a toll.

In her inauguration speech, Tsai deliberately avoided referring to the so-called "One China" principle. Leaders in mainland China regard her Democratic Progressive Party as pro-independence.

Now tourist spots across Taiwan are facing issues with origins across the strait. The number of visitors from mainland China is plummeting and traders are losing their biggest source of income.

"Sales tumbled after the presidential election," says one souvenir-shop owner. "Our sales have never slumped like this for any reason, other than a natural disaster."

Chinese tourists used to pack Donny Tang's hotel, accounting for some 80 percent of guests. Now many rooms are vacant.

"We want to know why the Chinese have stopped coming here," he says.

Over 4.1 million mainland Chinese visited Taiwan last year. Tourism-related income in Taiwan reached around $5.4 billion in 2015. Chinese tourists accounted for the bulk of that.

But according to Taiwanese media, visitors from the mainland were down 30 percent on the year during the recent holiday period. Normally it would be one of the busiest seasons for the Taiwanese tourism industry.

Around February, mainland authorities started telling Chinese tour operators to approve fewer applications for permits to visit Taiwan.

Chao Pao-kuei is one of those who has been hit hard. He added 15 vehicles to his fleet of buses when the pro-China policies of the previous government brought a surge in tourists. Recently, though, he's had to sell some of his vehicles.

Chao says he was astonished when he saw a message believed to have been written by a Chinese travel agency. The message was shared among tourism-related businesses in Taiwan.

"We won't permit any group tours to Taiwan until June," the message said. "It's because of a political issue."

Chao says "it's 100% political -- there's no other reason behind the sudden change."

He consulted an executive from the industry association for advice about how to proceed.

"The numbers of individual tourists and group tours are falling, especially this month," the executive said. "Travel to Taiwan is often affected by political developments. I hope the new administration will improve cross-strait relations."

Chao is keeping a close watch on Tsai's policies toward Beijing.

"I want the new government to come up with some good policies," he says.

In her inauguration speech, Tsai stressed the need to maintain stable relations with Beijing.

"The present relationship was built through exchanges and dialogue over more than 20 years," she said. "Taiwan and China should carefully maintain that achievement. We should ensure that relations will develop in a peaceful and stable manner, based on a political foundation."


Ichiro Korogi, a professor of contemporary Chinese studies at Kanda University of International Studies, joined anchors Aki Shibuya and Sho Beppu in the studio.

Shibuya: China has limited the number of applications for travel permits to Taiwan. How much of an impact will that have on the island?

Korogi: It will not have a critical impact, as it's an export-oriented economy. Tourism accounts for only 4 to 5 percent of total GDP. So the limit on the number of applications to travel to Taiwan is more of a symbolic act than an economic pressure.

Beppu: Seeing the figures, surely it's a symbolic act. But yet why do you think China is so eager to keep applying pressure on Taiwan?

Korogi: They will keep applying pressure to force Ms. Tsai to recognize the "One China" principle, which she has not accepted in a clear wayr. They will use various tools to achieve this goal. In fact, they have already taken seemingly punitive measures to cause some damage, not only to Taiwan's economy, but also to its diplomacy. It has been reported that they had Taiwanese fraud suspects deported from third-party countries to China. They also formed diplomatic ties with former Taiwan ally Gambia.

Their ultimate goal is to unify with Taiwan. They claim that Taiwan is a renegade province. They are worried that if they stop applying pressure, Taiwan will someday declare independence someday. They are also worried that Taiwan, under the DPP, will strengthen ties with the US and Japan. That will put China in a strategically difficult position.

Taiwan is geopolitically vital to China because it is at a pivotal location off the Chinese coast, and between Northeast and Southeast Asia. It's easy to get access to the Pacific Ocean from there. It is even more strategically important because China has disputes in the East China Sea and the South China Sea now.

Beppu: On the other hand, how will Taiwan's administration under President Tsai Ing-wen deal with Beijing?

Korogi: They will use ambiguous tactics. They will not openly express their pro-independence claim, as that would provoke China into aggressive actions. It will also worry the US, which wants to avoid confrontation with China to maintain the status quo.

Meanwhile, Taiwan will try to reduce its economic reliance on the Chinese market. Taiwan’s exports to China now account for 40 percent of their total. So they will try to diversify markets by shifting to India and Southeast Asia. They call it the New Southbound Policy. They will also try to join multilateral free-trade blocks, such as the TPP, to expand trade.

Shibuya: Where do you think China-Taiwan relations will go from here?

Korogi: In the short run, China will apply a lot of pressure on the Tsai administration to recognize the "One China" principle. But in the long run, both sides may find some equilibrium, as neither of them wants to destroy ties completely. For China, it would be detrimental to completely sever ties with Taiwan because that would alienate Taiwan more and push it toward independence. For Taiwan, it's still beneficial to maintain economic ties with China because it is not easy to transform the economy in one go. China will continue to be cautious about the Tsai administration and reduce official exchanges, but it will not damage economic ties with Taiwan completely, as Taiwan is one of its major investors and trade partners. Taiwan is very important for China.