Xiamen Government Suspends Chemical Project After Public

UNCLAS SECTION 01 OF 02 GUANGZHOU 000620

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STATE FOR EAP/CM AND OES/PCI
EPA FOR OFFICE OF INTERNATIONAL AFFAIRS
PACOM FOR FPA

E.O. 12958: N/A
TAGS: SENV PHUM ECON PGOV CH
SUBJECT: Xiamen Government Suspends Chemical Project After Public
Outcry


(U) This document is sensitive but unclassified. Please protect
accordingly.


1. (U) SUMMARY: The Xiamen government suspended, but did not
cancel, plans for the construction of a large chemical plant near
the city center after residents planned a large protest and the
story was covered by the mainland and Hong Kong media. The
Taiwan-invested paraxylene plant, which the Xiamen government had
been actively pushing, would have almost doubled the city's GDP and
increased its tax base significantly and was supported by the city's
party chief. Citizens opposed to the project, led by a Xiamen
University professor, claimed city leaders approved the deal for
political reasons without considering environmental risks. This is
yet another example - though on a different matter - of increased
activism among residents in South China and of their ability to get
authorities to reconsider programs and projects. END SUMMARY.

A Large Investment and Government Support
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2. (U) Investors in the chemical plant worth RMB 10.8 billion (USD
1.4 billion) had already received municipal and central approval and
were planning to begin construction soon in a location seven
kilometers from Xiamen's city center, according to media reports.
The plant would have produced 800,000 tons of paraxylene (PX)
annually upon completion in December 2008 and would bring RMB 80
billion (USD 10.4 billion) in annual GDP to Xiamen - almost doubling
its current GDP. According to Hong Kong and mainland media, Xiamen
Party Secretary He Lifeng has been a strong supporter of the
project. The lead investor in the project is Taiwan businessman
Chen Yu-hao, whose company Tenglong already owns an adjacent
chemical factory. Chen is reportedly wanted by Taiwan authorities
for embezzlement.

Opposition to the Plant's Location
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3. (U) The PX factory was planned for a location 1.5 kilometers from
the nearest residential area and seven kilometers from the city
center. According to press reports, PX plants in China are on
average 20 kilometers from residential areas (which is closer than
many other countries allow). PX, which is widely used in plastics
and paints, is carcinogenic and symptoms of exposure include
breathing problems and liver and kidney damage. Opposition to the
project has been led by Zhao Yufen, a Xiamen University chemistry
professor and academician with the China Academy of Sciences (CAS).
In March this year, Zhao submitted a petition with 104 other
signatories (including five other CAS academics) to the
national-level People's Political Consultative Conference requesting
the project be relocated at least 100 kilometers from the nearest
urban area. The petition did not, at the time, result in any
government action.

Planned Protest Leads to Suspension
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4. (U) After Xiamen residents planned a public demonstration in
front of city offices and the story was picked up by mainland and
Hong Kong media, the Xiamen government decided to suspend the
project. A text message that reportedly circulated among more than
one million Xiamen residents in recent days warned of the dangers
posed by the project, compared the plant to "an atomic bomb in
Xiamen," and urged residents to "take action for our own survival!"
Up to one million people reportedly received the message. The story
and planned protest was reported by numerous media outlets on May

30. At a press conference on the morning of May 30, Xiamen Vice
Mayor Ding Guoyan announced that the government had suspended the
project and would request an additional environmental assessment.


5. (SBU) In a follow-up call to the Xiamen Foreign Affairs Office,
an official told us they had no further information on the case.
Two contacts in Xiamen, one a lawyer and the other a manager with
Dell, said they had received the text message and supported the
effort to stop the plant's construction. They both expressed
skepticism that the project had been dropped, however, and said
officials may push it through after the media attention dies down.

Comment
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6. (SBU) This case highlights the growing public awareness of

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environmental issues in China and the willingness of citizens to
voice their complaints. In this case, the threat of public
protests, and the resulting media attention, proved more effective
than a petition to the central government. Though the future of the
project is unclear, it appears that the Xiamen government - which
prides itself on its environmental activism - is sensitive to the
charge that it has ignored environmental protection for the sake of
economic growth.

GOLDBERG