MAINLAND CHINA TOURISM PROVING DOUBLE-EDGED SWORD

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001266

SIPDIS

E.O. 12958: DECL: 10/26/2019
TAGS: PGOV ECON KDEM PREL ETRD SOCI CH TW
SUBJECT: MAINLAND CHINA TOURISM PROVING DOUBLE-EDGED SWORD
FOR TAIWAN

Classified By: Director Stanton. Reasons: 1.4 b/d


1. (U) This is the first of two reports on political
implications of newly launched people-to-people cross-Strait
exchanges. This cable looks at the influx of Chinese tourists
to Taiwan. Septel will look at mainland university students
in Taiwan.


2. (C) Summary: Tour groups from nearly every corner of China
have become a common sight throughout Taiwan since it eased
restrictions on mainland tourists in 2008. Over the
long-term, Taiwan officials view the influx as a great
opportunity to showcase the island's democracy as an
alternative to authoritarianism. The influx of mainland
visitors also can help Taiwan's struggling economy. Many
here, however, express concern that deepening cross-Strait
economic ties, including tourism, increase Taiwan's
vulnerability to political pressure from Beijing. They point
to China's restrictions on travel to Kaohsiung after the
city's Mayor invited the Dalai Lama to visit Taiwan as an
example. Those fears may be overblown, at least in Kaohsiung,
where Chinese tourists continue to stream in and the Mayor
remains popular despite Beijing's efforts to punish her. End
Summary.

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MAINLAND TOURISTS: THEY'RE EVERYWHERE
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3. (U) On a recent overcast day, dozens of camera-toting
tourists from Hunan Province quietly watched the precisely
choreographed changing of the honor guard at the National
Chiang Kai-shek Memorial Hall, where a large bronze statue of
the former Chinese President sits beneath the inscribed words
"ethics," "democracy" and "science." Their guide, Andy Chou,
said the visit to the memorial hall was a highlight for
mainland tourists because it provided a glowing perspective
on a towering historical figure vastly different from what
they learned back home. As a steady stream of mainland
tourists climbed up the long staircase to the memorial hall,
others flocked to the island's other popular haunts,
including the world's tallest building, the world-renowned
National Palace Museum, and scenic Sun Moon Lake.


4. (SBU) Chou's tour group was one of thousands that have
come to Taiwan since President Ma Ying-jeou decided last year
to ease stringent restrictions as part of his rapprochement
with China. Tourism Bureau Director of International Affairs
Chao Kwang-Shoung estimated on average between 1,000 and
1,500 Chinese tourists arrive each day. The influx would be
greater, industry analysts said, if not for capacity
restraints, lingering fears of H1N1 flu, Typhoon Morakot and
a partial boycott of Kaohsiung imposed by mainland
authorities to punish its Mayor for inviting the Dalai Lama
to visit Taiwan and approving the showing of a documentary on
Uighur activist Rebiya Kadeer. Still, the announcement on
October 23 that Taiwan would establish a tourism office in
Beijing (and that the PRC would open one in Taipei),its
first quasi-official representative to be stationed in China,
underlined Taipei's desire to entice more mainlanders to
Taiwan. Currently, tourism accounts for less than 1 percent
of Taiwan's gross domestic product, far less than popular
destinations such as Thailand and Hong Kong.

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SHOWCASING DEMOCRACY...
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5. (SBU) Authorities here see the tourist influx as a golden
opportunity to showcase Taiwan's democracy and freedoms of
speech and expression as an alternative to mainland China's
one-party authoritarian political system. "I think when they
come to Taiwan it must be a stimulus," Chou said. Mainland
tourists were surprised to find a friendly and orderly
society -- seeing lines at bus stops and railway stations was
a huge shock for visitors from China's chaotic cities --
despite few police officers patrolling the streets. Industry
officials also agreed that China visitors were mesmerized by
television talk shows in which commentators harshly
criticized public officials from President Ma on down. "They
really love to watch local cable TV," said Chao.


6. (C) Yet not all the mainland visitors seem comfortable
with Taiwan's relatively free society. Mr. He, a tourist from
Chengdu, Sichuan Province, decked out in assuredly fake Gucci
sneakers and Louis Vuitton belt, told PolOff at the Chiang
Kai-Shek memorial that Taiwan politics struck him as too
messy. Talk show commentators were "always arguing, always
arguing," and he spoke disapprovingly of a tiny street

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protest he had seen the previous day. Across town at the Sun
Yat-sen Memorial Hall, a tourist surnamed Ding from Jiangsu
Province said he thought people on Taiwan had "mental
problems" because they were always critical toward and lacked
confidence in their government. "If economics is the
priority, people should just leave it to the government," he
said. Still, as he got ready to board his tour bus, Mr. Ding
acknowledged that democracy was good and China should move
toward it.

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... AND BOOSTING EARNINGS...
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7. (SBU) The mainland tide also is warmly welcomed by
Taiwan's tourism industry, which has seen arrivals from other
destinations stagnate because of the global recession.
Everyone from travel agencies to hotels to restaurants to
night market hawkers hopes to cash in. Spicer Lee, general
manager at Phoenix Tours, said the mainland already accounts
for 10 percent of his business and could one day grow to 30
percent. Jonathan Lee, a leading hotelier in Kaohsiung, said
mainland Chinese visitors accounted for about 8 percent of
his total business but were far more important to other,
cheaper hotels in Taiwan's second-largest city. According to
Tourism Bureau figures, 333,000 mainlanders accounted for
nearly one-fourth of tourist arrivals to Taiwan in the first
eight months of 2009. The nearly 600 percent jump in China
tourists over the same period last year was largely
responsible for the overall 29 percent increase in tourist
arrivals. (Note: These figures are understated because they
don't include people who do not declare tourism as their main
purpose of travel but come to Taiwan at least in part for
sightseeing. Yang Ruey-tzhong, the official appointed as the
Taiwan Strait Tourism Association's first representative in
Beijing, predicted more than 600,000 mainland tourists will
come to Taiwan this year and said the goal for next year was
1 million. End note.)

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...BUT AT WHAT COST?
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8. (C) Yet many here are queasy that the growing wave of
China tourists leaves Taiwan economically vulnerable to
political pressure from Beijing. As an example, they point to
China's restriction of travel to Kaohsiung in response to
Mayor Chen Chu's invitation to the Dalai Lama to visit Taiwan
and her decision not to cancel the screening of a film to
which Beijing strongly objected. Lu Ji-xian, news section
chief at the Kaohsiung-based Taiwan Times newspaper, said
more than 10,000 rooms were cancelled in the city by mainland
tourists, forcing at least two hotels to cut employee
salaries. Hsia Mei-chen, who heads the mainland tourist
section at Stylized Travel agency in Kaohsiung, said the
cancellations had a "huge effect" on business. "You can say
the majority of people in our industry don't approve of what
the mayor did," Hsia said. "I think there was no need to
invite the Dalai Lama."


9. (C) Still, the boycott may not have lasting economic or
political effect in Kaohsiung. Indeed, the scope of the
boycott remains unclear. An aide to Mayor Chen said only tour
groups of mainland public servants were avoiding Kaohsiung,
while others said some mainlanders were coming for day visits
but not staying overnight. Industry sources said H1N1 flu and
Typhoon Morakot kept some visitors away, but Lee noted that
travel agents who canceled rooms at his hotels specifically
cited government pressure. In any event, during an October
20-21 visit to Kaohsiung, Taipei-based PolOff saw Chinese
visitors aplenty at the city's main tourist spots including
the Liou-Ho night market, where several mainland groups
walked the gauntlet of stalls selling everything from $50 NT
(US$1.50) knock-off watches to not-quite-authentic tuna
burritos (mustard available at no additional charge). Some
hawkers acknowledged the number of Chinese tourists had
thinned, but they complained the mainlanders spent far less
money than others. "The mainlanders bargain but then they
don't always buy," said a T-shirt vendor surnamed Lin as she
made a sale to a Japanese tourist. "The number of Japanese
are way down, but at least they actually buy stuff."


10. (C) Although the reporter Lu does not think Mayor Chen
necessarily benefited politically from challenging China, her
popularity remains close to 70 percent. A key aide to Chen
told PolOff that the number of businesses directly affected
by the boycott was small. Lee, the hotelier, while
acknowledging some of his colleagues were upset by the
Mayor's action, said he stood "on the other side" and felt

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China was wrong to retaliate economically over a political
issue. "You have to depend on China in some ways, but you
can't make the ties too close," he added. Lee recommended
that Taiwan more aggressively promote tourism in the Japan
and South Korea markets so as not to depend too much on China.

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COMMENT: NEITHER SIDE TO REAP FULL POLITICAL BENEFITS
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11. (C) Taiwan's hope that opening the island to China
tourists will promote democracy on the mainland will take
years to bear fruit. The initial wave of Chinese tourists
includes predominately elderly travelers who appear
fascinated but also more than a little wary of Taiwan's
free-wheeling democracy. Should subsequent waves trend
younger, the political effect could be greater. Meanwhile,
Kaohsiung Mayor Chen appears to have easily weathered China's
first attempt to leverage its tourists for political gain on
Taiwan. Several analysts reminded PolOff that some other
attempts by China to interfere in Taiwan politics -- notably
then-Premier Zhu Rongji's 2000 warning of dire consequences
should Democratic Progressive Party presidential candidate
Chen Shui-bian be elected -- failed miserably. Perhaps,
then, the likeliest scenario for expanding tourism is a
growing familiarity between the peoples of Taiwan and China,
which should complement efforts to peacefully develop
cross-Strait relations.
STANTON