A group of Taiwan firms have signed a contract to set up a $4.5-billion refinery complex in China, defying a ban against such projects imposed by the island's government, officials and media said Thursday.

The group, led by Ho Tung Chemical, inked the investment agreement with the government of southeast China's Fujian province and with Sinopec, China's biggest petrochemical group, in Beijing on Tuesday.

The agreement was signed after Taiwan's government, citing environmental considerations, rejected a similar, controversial $20 billion project for a giant refinery and petrochemical complex in western Taiwan.

"Since the project has hit a snag, the government must find a way out for local petrochemical companies, or the companies will gradually disappear," Ho Tung founder Chen Wu-hsiung told the Taipei-based Economic Daily News.

Local companies are still barred from investing in China's refinery industry and some high-tech sectors despite eased tensions following the election of Beijing-friendly politician Ma Ying-jeou as Taiwan president in 2008.

The planned venture, based in Fujian, will have capacity to refine an annual 16 million tonnes of oil and 1.2 million tonnes of ethylene, a key organic compound widely used in industry.

A Taiwan-based complex of this type has been under consideration since the 1990s but has had its location changed several times due to strong objections from local residents and environmentalists.

Activists insist that Taiwan, long plagued by industrial pollution, can no longer afford such large energy-guzzling projects and have staged a string of street protests against the proposal.

In response, Taiwan's economic ministry reiterated the government's ban on investment in refineries on the mainland by Taiwanese investors.

"The ministry is reviewing the ban, but before that can be done, the ban still stands," the ministry said in a statement.

Taiwan and the Chinese mainland split in 1949 at the end of a civil war.

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