How significant events and economic factors influence Taiwan's outbound tourism to China

It was not until 1987 that the relations between Taiwan and China began to thaw, opening the door for cross-strait civilian contacts. In recent years, with China's rapid economic development, ever-increasing numbers of Taiwanese citizens have been traveling to China, in spite of the fact that official cross-strait relations remain hostile, with political and even military crises often occurring. How do such factors affect Taiwanese people's willingness to travel to China? This study is intended to discuss how significant events (such as the "Special State-to-State Relation" proposition, Taiwan's presidential elections, and the SARS outbreak) and economic factors influence Taiwan's outbound tourism to China. Quarterly data used in this study cover the 41-quarter period from 2Q 1994 to 2Q 2004. A unit root test ensures that all of the estimated variables are stationary; then, a casual model is developed to estimate how economic variables and significant events influence Taiwan's outbound travels to China. Empirical results show that significant political events do not remarkably reduce the Taiwanese people's willingness to travel to China, while the SARS outbreak had a greater impact. On the other hand, income, price, and outbound travels of the previous period are significant independent variables, while variables such as exchange rate and the prices of alternative destination tours are less significant.