The dilemma of paraxylene plants in China: Real trouble for the environment?

China's demand for paraxylene, an essential material for the chemical industry, is growing rapidly. However, the public is worried about the influence of paraxylene plants on the environment. The contradiction between supporting paraxylene and opposing it poses a considerable challenge for the Chinese government. Therefore, objective evaluation of paraxylene plants' impact on the environment is of great significance to industrial development. Using the urban panel data of 102 cities in China from 2003 to 2017, this paper applies the PSM-DID method to study the relationship between paraxylene plants and air quality. This paper shows that paraxylene plants play a significantly positive role in aggravating urban air pollution. Specifically, paraxylene plants increase not only industrial dust pollution but also increase SO₂ emissions. This influence is still valid after multiple robustness tests. Moreover, the mechanism analysis reveals that paraxylene plants' construction promotes income growth but hinders foreign direct investment. Finally, this paper provides policy suggestions on promoting paraxylene industrial development in terms of governments, enterprises, and the public.