Ding Guoyan, vice mayor of Xiamen, a coastal city in Fujian Province, announced the suspension at a press conference yesterday.

The city had planned to build the project - a paraxylene plant with a 10.8 billion yuan (US$1.35 billion) investment - in Haicang District.

The plant, operated by the Tenglong Aromatic PX (Xiamen) Co, a company formed by Taiwan-funded Xianglu Group, was expected to add 80 billion yuan to the city's industrial output annually and to be China's largest producer of paraxylene, a petrochemical that goes into polyester and fabrics.

Ding said the project had passed an environmental evaluation by an expert panel before it was given the green light by the National Development and Reform Commission, the country's top economic planning body.

"Its evaluation and approval were strictly in line with China's laws and regulations," Ding said. But the project drew widespread criticism over the past two months.

In March, 105 members of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, proposed a relocation of the project during its annual plenary session.

Paraxylene is a highly polluting and carcinogenic petrochemical, said Zhao Yufen, a CPPCC member who initiated the proposal, adding that the material will also increase the chance of fetal abnormality.

"A paraxylene project should be at least 100 kilometers from a major urban settlement to be considered safe," she said.

The planned location of the plant is in a development zone in Haicang, inhabited by more than 100,000 residents. The nearest residential area is less than 1.5 kilometers from the site, and one fifth of Xiamen island is within a radius of 10 kilometers.

Local residents compared it to an "atomic bomb" and sent nearly one million text messages via cell phones to their friends and family members, urging the government to renounce the project.

Ding said: "The city government has listened to the opinions expressed and has decided, after careful deliberation, that the project must be re-evaluated."

The government has asked a professional agency to reassess the environmental impact study.