Why is the XmlWriter always outputting utf-16 encoding?

Strings are UTF-16, so writing to a StringWriter will always use UTF-16. If that's not what you want, then use some other TextWriter derived class, with the encoding you like.

As far as I know, StringWriter class will always use UTF 16 encoding when serializing to string. You can write your own override class that accepts a different encoding:

public class StringWriterWithEncoding : StringWriter
{
    private readonly Encoding _encoding;

    public StringWriterWithEncoding()
    {
    }

    public StringWriterWithEncoding(IFormatProvider formatProvider)
        : base(formatProvider)
    {
    }

    public StringWriterWithEncoding(StringBuilder sb)
        : base(sb)
    {
    }

    public StringWriterWithEncoding(StringBuilder sb, IFormatProvider formatProvider)
        : base(sb, formatProvider)
    {
    }


    public StringWriterWithEncoding(Encoding encoding)
    {
        _encoding = encoding;
    }

    public StringWriterWithEncoding(IFormatProvider formatProvider, Encoding encoding)
        : base(formatProvider)
    {
        _encoding = encoding;
    }

    public StringWriterWithEncoding(StringBuilder sb, Encoding encoding)
        : base(sb)
    {
        _encoding = encoding;
    }

    public StringWriterWithEncoding(StringBuilder sb, IFormatProvider formatProvider, Encoding encoding)
        : base(sb, formatProvider)
    {
        _encoding = encoding;
    }

    public override Encoding Encoding
    {
        get { return (null == _encoding) ? base.Encoding : _encoding; }
    }
}

So you can use this instead:

using(var stringWriter = new StringWriterWithEncoding( Encoding.UTF8))
{
   ...
}