XML.encoding

The encoding attribute is represented by a syntax element with field type ‘XML.encoding', and is always a child of an XML.XmlDecl syntax element.

In the following example, the encoding attribute has a value of UTF-8.
<?xml version="1.0" encoding="UTF-8" standalone="no"?>
<!DOCTYPE s1 PUBLIC "http://www.ibm.com/example.dtd" "example.dtd">
<s1>........</s1>
You cannot specify IBM MQ encodings in this element.

In your ESQL, (XML,"Encoding") must include quotation marks, because Encoding is a reserved word.