State news agency Xinhua reported that the plant in Longyan is set to pay medical costs and test all children aged under the age of 14 who live near the plant.
Two medical institutions have already tested 287 children under 14 with 121 showing high levels of lead in their blood. This condition can cause vomiting, loss of appetite and permanent brain damages.
In China, rapid economic growth has come at the cost of high levels of environmental pollution, which affects disproportionately children.
In August, hundreds of children living near smelting plants in Shaanxi and Hunan were found to have excessive amounts of lead in their blood.
Two executives of a manganese smelting plant in Hunan were detained by police after children fell sick with lead poisoning.
In China, the birth defect rate almost doubled in the past decade. Pollution is seen as a major factor in causing this rise and defects include extra fingers and toes, cleft lips and congenital heart disease.
In Beijing alone, the rate was 170 per 10,000 births last year. That is significantly higher than the global average.
More generally, a 2007 World Bank study reports that 460,000 Chinese have died from water and air pollution.
In 2006, the cancer rate also jumped over 2005 by 19 per cent in cities and 23 per cent in rural areas.
About 95 per cent of tumors attack the digestive system. Medical treatment for cancer cost about 100 billion yuan (more than US$ 14.6 billion) or about 20 per cent of China’s total medical expenditures.
Until recently, local authorities have tried to avoid taking any step against polluters, prosecuting instead those who complain about pollution.
However, public opinion has been increasingly angry and vocal about the problem. Too many Chinese still remember last year’s melamine milk scandal when it was revealed that dairy companies used an organic compound with several industrial uses to adulterate baby formula.
In 2008, more than 300,000 children suffered kidney problems caused by drinking tainted milk, and five died.
Now local authorities in China are starting to take measures against the worst offenders, but are also continue taking action against locals who complain.
Oftentimes, residents must take to the street to demonstrate to get the authorities to protect them.