Earlier this week, Zhang Lijun, vice director of China's State Environmental Protection Administration, said export manufacturers who violate China's pollution laws would be forced to close for one to three years... The [Ministry of Commerce] says the prices of Chinese exports are artificially low because factories aren't paying for the costs associated with pollution... In the past, companies caught polluting have been subjected to fines...[that] often have little impact, since some companies find it cheaper to pay them than to upgrade their facilities... [T]he government is increasingly trying to employ pollution initiatives that have a more direct effect on companies' business operations. "...they're trying to use market-based approaches and financial tools to promote changes in behavior," says Ma Jun, who heads China's Institute of Public and Environmental Affairs... Rampant pollution is leading to widespread health problems and water shortages that are increasingly viewed as a threat to the nation's stability. Last year, Fountain Set Holdings Ltd., one of the world's largest cotton-fabric manufacturers, was temporarily shut and forced to pay more than $1 million in back fees after the company was cited by SEPA for dumping roughly 22,000 tons of contaminated water each day directly into a local river. Fountain Set, which has since built a water-treatment facility and cleaned up its operations, produced fabric for dozens of major multinational companies, including Wal-Mart Stores Inc., Target Corp. and Lands End Inc. [part of Sears].