'Economic gift' or 'carrot and stick' strategy: Why is it so hard to restart cross-strait tourism?

SINGAPORE: Ringo Lee, a tour operator in Taiwan with over 30 years of experience, used to see brisk business from mainland tourists.

“I used to own six large buses, ferrying tourists from mainland China around Taiwan for sightseeing every day,” he told CNA.

That was in 2015. Lee has had to face a new reality in recent years.

“I have none now, all of (those buses) have been sold," he lamented. “Today, there are virtually no tourists coming from across the strait.”

Cross-strait tourism has effectively fallen into the doldrums over the past eight years, driven by a combination of politics and the pandemic. However, positive language from recent talks in Shanghai suggests an easing of travel curbs could be on the horizon, albeit at a city-to-city level, observers note.

Analysts CNA spoke to believe this is a good first step in getting cross-strait tourism off the ground again, as well as in building mutual trust - although they caution this will require considerable goodwill from both sides. 

While the economic benefits to both Beijing and Taipei are clear, observers note that any action taken will invariably be politically tinged, posing concerns over whether it will last - especially as an increasingly assertive China eyes reunification while Taiwan baulks.

BOOSTING TOURISM ON THE ITINERARY?

Cross-strait tourism has become sharply limited since 2016 when Taiwan’s Democratic Progressive Party came into power. Amid heightened cross-strait tensions, the imposition of strict travel curbs due to the COVID-19 pandemic delivered another gut punch.

China currently bars its citizens from travelling from the mainland to Taiwan for tourism. Mainland tourists from Fujian province are the exception - and even then, they can only visit Kinmen and Matsu.

Meanwhile, Taiwan maintains a ban on group tours to mainland China. Taipei also raised its travel warnings for mainland China - along with Hong Kong and Macau - to the second-highest level in June, warning against “unnecessary travel”, after Beijing threatened the death penalty for “diehard” Taiwan separatists. 

But there have been recent indications that some easing of travel curbs could be on the cards.

At the 2024 Shanghai-Taipei City Forum on Dec 17, Shanghai Vice Mayor Hua Yuan extended a cordial invitation to Taiwan residents to visit Shanghai. He also pledged to promote group tours to Taiwan for Shanghai residents, with Taipei as a key destination.

Hua's remarks hint at a potential trial initiative to allow Shanghai residents to be the first to restart cross-strait tourism, said Lee, who is chairperson of the High-Quality Travel Association in Taipei as well as an assistant professor of tourism studies at Taipei City University of Science and Technology.

"Starting with a city-to-city exchange allows trust to build gradually. It offers an ideal scenario where issues can be resolved at a local, non-central level, free from ideological and political interference," he said.

A trial involving individual cities in both mainland China and Taiwan could be a “sensible option” for restarting cross-strait tourism, Lim Tai Wei, a professor from Soka University’s business faculty and an expert in East Asian studies, told CNA.

But Lim emphasised that the “right political atmosphere” is ultimately necessary for such exchanges to be successful. Donald Trump’s return to the White House next month could also complicate matters, he pointed out, as how he addresses the Taiwan issue could significantly impact the future of cross-strait relations.

TAIWANESE TOUR OPERATORS FEEL THE PINCH

Cross-strait relations were arguably at their best between 2008 and 2016 when the Kuomintang’s (KMT) Ma Ying-Jeou was Taiwan’s president. During that time, direct sea, air and mail links were resumed after a six-decade ban.

Mainland Chinese became Taiwan's largest source of inbound tourism within a year of the inaugural direct flight in 2008. By 2014, over 3 million Chinese tourists were visiting the island annually, according to government statistics. By 2016, mainlanders accounted for nearly half of the 10 million annual arrivals to the island, which has a population of 23 million.

Since then, numbers have fallen off a cliff amid tough travel curbs. In the first ten months of this year, only around 14,000 mainland Chinese residents visited Taiwan for leisure, according to official Taiwanese data.

Currently, only Chinese citizens who meet strict criteria are allowed to visit Taiwan for leisure, provided they depart from a third location and the trip is self-guided. This group represents less than one per cent of the entire market value chain, noted Lee the tour operator and industry academic. 

Taiwan’s tourism industry has endured "notable pains" in pivoting to alternative revenue streams since the decline in mainland Chinese tourist arrivals, with “a lot” of operators ending or abandoning investments made during the mainlander boom, Lee highlighted.

"These extreme fluctuations in the number of mainland Chinese arrivals disrupt the market and distort related mechanisms. No other major tourist destination around the world faces a similar issue," he said.

The indefinite suspension of group tours from Taiwan to mainland China has also caused significant economic losses for Taiwanese tour operators, over 90 per cent of whom organise such tours, Lee pointed out.

Taiwan was set to lift the COVID-19-era restriction in March but halted the plan a month before, citing Beijing's failure to reciprocate the goodwill gesture.

Lee asserts that demand in Taiwan for sightseeing visits to mainland China remains strong. According to China immigration data, mainland China welcomed 2.96 million Taiwanese visitors from the start of the year till October, a 68.4 per cent year-on-year increase. Analysts have attributed this upward trend to several mainland initiatives to attract Taiwanese visitors, including streamlined entry permit applications and discounted or complimentary tickets to major tourist attractions.

With cross-strait tourism a far cry from its heyday, any boost would be welcome news to both Beijing and Taipei, analysts note.

Taiwan is already grappling with a widening travel deficit, where more residents are heading abroad compared to the number of people who visited. Having access to mainland Chinese tourists would help narrow the gap and boost the island’s economy.

Estimates suggest that outbound Taiwanese travellers could reach 17.5 million this year, while only 7.5 million international visitors are expected to come to Taiwan. This gap of 10 million trips and a trade value deficit of NT$738 billion (US$22.5 billion) would be the largest ever recorded.

While allowing mainland Chinese tourists into Taiwan would be an economic boon for the island, the industry must beware of over-dependence, warned Wu Se-chih, director of the China Research Center at Taiwan Thinktank.

He told CNA that based on past experiences, travel by mainland Chinese tourists has typically been heavily restricted, with requirements to sign up with designated operators and adhere to fixed itineraries.

“This practice tends to benefit only a small group of industry players, with very little trickling down to the broader business community," he said.

"Moreover, Chinese authorities have the ability to 'turn off the tap' whenever they choose, when it comes to allowing tourists into Taiwan. This presents significant risk and uncertainty to the sector."

Meanwhile, China is trying to boost a stuttering economy weighed down by geopolitical and trade tensions with the West, as well as challenges at home like a beleaguered property market and a rapidly ageing population.

“Taiwan, as a Northeast Asian entity, currently has the highest per capita income in the region, excluding Hong Kong and Macau. This makes it a significant source of tourism consumption for China, representing a clear convergence of interests between the two sides," said Lim from Soka University.

TOURISM AS A BARGAINING CHIP

While the economic gains are clear, analysts warn that any moves made to boost cross-strait tourism - if they do materialise - will inevitably have a political dimension.

Taiwan Thinktank’s Wu asserts that both mainland China and Taiwan have strategically used tourism as a bargaining chip, particularly in their attempts to gain a “political upper hand” over one another.

"We've seen both sides publicly express a willingness to facilitate more tourism visits for residents on both sides, but despite the passage of time, there has been little to no progress,” he noted.

This is because any potential move by either side is tied to their respective political agendas, Wu noted.

“For China, it views mainland Chinese arrivals as an 'economic gift', while for Taiwan, under the DPP leadership, it's about maintaining a firm stance against China’s carrot and stick cross-strait approach," he explained. Beijing views Taiwan as a part of China and has vowed to reunify it, by force if necessary.

On the day of the Shanghai-Taipei forum, a spokesperson for China’s Taiwan Affairs Office stated in response to a query that the mainland welcomes the early restoration of tourism to Taiwan for mainland residents. At the same time, the spokesperson urged Taiwan’s ruling DPP to remove existing restrictions and obstacles on cross-strait exchanges and cooperation.

Taiwan's Minister of Transportation Chen Shih-kai said the following day that Taiwan would review and consider relaxing the ban on group tours and other tourism exchanges - if the mainland lifted its political restrictions.

Lee, the tour operator and academic, hopes that both Beijing and Taipei can leave politics out of the equation, at least when it comes to cross-strait tourism.

"(We) in the industry often hope that politics would not interfere with the development of tourism exchanges with mainland China. We wish for an open and free market, similar to what exists with other travel destinations," he added.

But such a hope is effectively a pipe dream, said Soka University’s Lim.

"When it comes to cross-strait matters, it is impossible for both sides to set aside their political standpoints and differences to establish a free and open market,” he explained.