They look at the mechanics of official regulation, the economics of compliance, and regulatory discretion. In practice, local regulators have considerable discretion in judging both compliance and appropriate penalties for noncompliance. China's regulators play by the rules, but often bend them. Underreporting and underassessment are common in China. But variable regulation is systematic, not random, and seems to reflect important environmental and social concerns.
Old factories pay more, state-owned factories pay higher rates, and big employers get a discount.
And regulators give little or no slack to heavy dischargers. The full report is available in PDF format.