Bad Chemistry

State planning used to be a slam-dunk. No more. In the past year grassroots protesters in China have forced the delay or suspension of at least a half-dozen big centrally-backed projects. Their fears of toxic fallout are magnified by mistrust of a system lacking public oversight.

The recent chain of "not-in-my-backyard"-style protests began with a backlash against a chemical factory in the seaport of Xiamen. Residents opposed to the project directed much of their wrath at a fugitive Taiwanese tycoon named Chen You-hao, founder of petrochemical maker Xianglu, now Xiamen's top taxpayer. He served as "adviser" to the company on its $1.4 billion addition set to produce paraxylene (PX), a basic ingredient in producing plastics, polyester and cleaning agents. It was the first privately owned plant of its kind in China.

But just as the PX site was being cleared, leading Xiamen scientists brought charges of safety hazards before a national congress in Beijing. Bloggers and property owners took up the "anti-PX" cause, and last June thousands of Xiameners marched against the would-be plant. The project's been grounded since that time.

Chen's conglomerate in Taiwan imploded in the 1990s, and the government stuck him on the most-wanted list after he failed to stand trial on breach of trust charges. Now 68 and semi-retired in San Francisco, Chen laid low throughout the PX saga. But things came to a head during a rare public review period in December. Again Xiameners vented overwhelming hostility toward the project, and local Communist Party bosses made internal recommendations to relocate it further down the coast. Meanwhile company chiefs were lobbying Beijing authorities to keep it in Xiamen, and accept their defamation suit against the scientists who first challenged the project. Chen made the company's case to NEWSWEEK at his hotel room in Beijing, his first and only interview on the ordeal. Excerpts:

NEWSWEEK: Chinese media have hailed your company's setback as a popular victory in terms of official accountability and the goal of balanced, "scientific development." Even you must see some greater good?
Chen You-hao: The "scientific development" concept is very democratic. But science is science. What's true is true, and what's false is false. You can't have people twist it. But here people have twisted it.

How?
The full truth has to be publicized. In the United States, in Japan, in Europe and in other places, a lot of people are living next door to aromatics plants like ours. So what to do? None of them have moved. Do [state-owned PX plants] in Shanghai and Nanjing all now have to move? China has another 20-some aromatics plants with a lot of residents living next door. Do they all have to move as well? A theory has to be consistent.

Xiamen has sprawled since your petrochemical zone was established. How did planning go so awry?
We did nothing wrong. But frankly, for the local government to create a second city center here was wrong. By law, the 2004 second city center plan never got the approval of the central government. The [1995] plan for the industrial zone did. So who do you think is right?