Land in Xiamen was already being cleared for the plant
There is continuing controversy in China over where to site a chemical factory, which opponents say could cause grave damage to people's health.
The government has announced that the plant will now be built in Zhangzhou, rather than the coastal city of Xiamen.
High-profile protests in Xiamen in 2007 on environmental grounds led to a rare change of heart by officials.
Zhangzhou residents are said to be angry at the move because they have not been consulted over their concerns.
They fear the factory, which will make the chemical paraxylene, could emit toxic fumes that may cause cancer.
Paraxylene is used to make plastics, polyester and cleaning products, and can damage vital organs after long-term exposure.
The BBC's China editor, Shirong Chen, says there are also suspicions that China is pushing through infrastructure projects at all costs, to try to help boost a flagging economy.
The chemical plant, funded by Taiwan's Xianglu Group, was originally to be built next to a new residential area in Xiamen, Fujian Province.
Many of the new homes are in expensive compounds with tennis courts, swimming pools and manicured lawns.
In June 2007, local residents staged a series of protests in Xiamen city centre against the proposed plant on environmental grounds.
Work had already started on the plant at its original location on the Haicang peninsular on the outskirts of Xiamen.
But after the protests, which received nationwide publicity, the local government put the project on hold.
It also ordered an environmental report into the scheme, costing 13.8bn yuan ($2.1bn, £1.4bn).
The findings were published by the Ministry of Environmental Protection.
The BBC's Michael Bristow in Beijing says they suggested the company had agreed to limit the factory's pollution.
The ministry also revealed that the plant, which has received preliminary approval, will now be moved from Xiamen to the nearby city of Zhangzhou.
At least one newspaper article asked why, if the plant will not emit toxic fumes, it cannot be built in Xiamen as originally planned.