Zhang Guohua, city mayor of the eastern China city of Nantong, said in a statement the city would terminate the planned pipeline that would have emptied waste water from a Japanese-owned paper factory into the sea near Qidong.
The decision came hours after about 1,000 protesters marched through the city of Qidong, about one hour north of Shanghai, shouting slogans against the pipeline.
"The government says the waste will not pollute the sea, but if that's true, then why don't they dump it into Yangtze River?" Lu Shuai, a 25-year-old protester who works in logistics, said while marching.
"It is because if they dump it into the river, it will have an impact on people in Shanghai and people in Shanghai will oppose it."
The outpouring of public anger is emblematic of the rising discontent facing Chinese leaders, who are obsessed with maintaining stability and struggling to balance growth with rising public anger over environmental threats.
Such protests "suggest that the middle class, whose members seemed willing to accept in the 1990s that being able to buy more things equaled having a better life, is now wondering whether one's quality of life has improved, if you have to worry about breathing the air, drinking the water, and whether the food you're eating is safe," said Jeffrey Wasserstrom, of the University of California Irvine.
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