The $18.74 billion yuan (S$4.07 billion) paraxylene and factory will be built in Zhangzhou, a city west of the southeastern Chinese port of Xiamen, according to an Environment Ministry announcement released on Tuesday.

Original plans to build the paraxylene plant closer to Xiamen, a major port city, triggered protests over possible risks from the toxic chemical, which is used in printing and to make polyester.

Short-term exposure to paraxylene can cause eye, nose or throat irritation in humans, according to the US Centres for Disease Control and Prevention. Chronic exposure can affect the central nervous system and cause death.

The project by the Tenglong Aromatic PX Co. was suspended for months after government advisers joined residents in lobbying the government not to locate the plant in densely populated Xiamen.

The project also includes a factory to make purified terephthalic acid, or PTA, which is used in polyester coatings and resins.

The Environment Ministry's statement did not include any commentary or other details, though it listed the amount of energy and emissions expected in a summary of its impact assessment.

According to the state-run newspaper China Daily, the chemical complex will be built 80 kilometres (50 miles) from the Zhangzhou's city center. Plans initially called for it to be 16 kilometres (10 miles) from Xiamen, a city of 1.5 million, with homes as close as 1,500 meters (about one mile) away.

The report cited local officials as saying that the project would give a huge boost to the area's economy, which has long lagged behind other coastal regions.

However, opinions still appear divided, with some questioning whether economic growth should come at any cost.

'Environmental protection should not yield to economic growth.

This is an important aspect of sustainable development,' said a commentary in Wednesday's Beijing Youth Daily, another state-run newspaper. -- AP