Controversial chemical plant resumes production in China

Beijing (CNN) -- A chemical plant in northeast China that sparked huge protests last summer amid concerns about its safety has resumed production, despite earlier assurances that it would relocated.

A local government official in the city of Dalian, who declined to be named, said the plant, owned by Fujia Dahua Petrochemical Company, is back in operation but insisted current production had passed "the national safety checks."

In August, tens of thousands of local residents took to the streets demanding the relocation of the plant after it threatened to spill toxins into the city when a typhoon breached a dike nearby. The plant produces Paraxylene (PX), a reportedly carcinogenic chemical used in the production of polyester films and fabrics.

The local government closed down the plant after the protest and promised to move the factory to an industrial park outside the city, but did not say when the move would take place.

The protest was viewed as the latest example of China's urban middle class -- long considered the main beneficiaries of the government's economic reforms -- banding together, often via the internet, to defend their rights.

Protest prompts chemical plant shutdown

But in December, Chinese media reported that Dalian's local government had reversed its decision, an allegation the same official denied Tuesday.

"There is no decision to stop moving the plant. It will be moved eventually. But it takes time." she told CNN, without giving any new details about when the move would happen.

The official explained the resumption of production was based on economic concerns. "We need to consider the profit of the business," she said, "It takes time to move the plant. If the production is halted before the relocation, the business will be bankrupted."

The Fujia Dahua Petrochemical Company is not the only one that will suffer the loss due to the halt of the production. The local government owns a major stake in the two-year-old PX plant, representing an investment of $1.5 billion, according to state media.

Local media also reported that the government would be liable to pay compensation for breach of contract.

However, the resumption of business at Fujia was a surprise for some local residents in Dalian. "It's not an issue about whether the production of the plant passes the national safety checks or not," said one local resident, who participated in the protest last summer.

"The resumption of the production itself is not acceptable. The government should keep its promise."

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