Literally all matter in existence is "chemicals", you should be more specific. There are also dozens of types of plastic with varying degrees of chemical composition and safety, so just saying "plastic" is dangerous is also misleading. Certain type of plastics can leech chemicals when heated or scratched, but not all. Children will come into contact with plastic constantly every day of their lives (clothes, packaging, chairs, etc.), so a plastic bag that's covered with yarn anyway is not going to hurt a child. Unless your child lives in a bubble (but not a plastic one of course).
On a related note, the most popular yarn fiber, acrylic, is a thermoplastic. The majority of clothing is made of various synthetic fibers. There's a good chance you're wearing plastic right now.
As for cats, toys given to animals should always be inspected carefully and depend on the animal. If you have an animal that tears up toys, of course you should always be careful what you give them.
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