Found the following answer works for me.
Traditional Chinese
mysql_set_charset('big5');
header("content-type:text/html; charset=big5");
$stack = array();
$data = array("id" => $row[0], "name" => urlencode("台灣"));
array_push($stack, $data);
$json = urldecode(json_encode($stack));
echo $json;
Simplified Chinese
change the 'big5' to 'gbk'