this contrasts with the debate of the early s when the rise in the average wage of the newly industrializing economies nies relative to that of the united states was used to allay fears about the effect of trade on income inequality this may be partly due to a declining growth in labour supply and restrictions on geographical labour mobility tdr chap moreover the new labour contract law which came into effect in stipulates minimum wage requirements and allows a strengthening of the bargaining power of employees finally labour compensation has also increased because of rapidly rising labour productivity according to banister and cook labour productivity in chinas industrial sector including manufacturing as well as construction mining and utilities increased at an average annual rate of about per cent betw een and the reason for this rapid productivity growth is a combination of sizeable and growing capital investment and improved education and skill levels of chinese workers along with the use of advanced technologies by transnational corporations tncs engaged in international production sharing as discussed below