China's consumption is on track to replace investment as the mainland's main engine of economic growth, making a long-promised rebalancing of the economy a reality. Dubbed the "third engine" of the economy until now, data from the National Bureau of Statistics yesterday revealed that consumption contributed 51.2 per cent to gross domestic product growth in 2014, up from 48.2 per cent a year ago. "China's consumption on average is expected to outpace investment and GDP with a growth of 7 to 8 per cent in real terms in the next few years," Wang Tao, chief China economist at UBS told the South China Morning Post . "Its share in GDP should rise by another 3 to 4 percentage points by the end of 2020." Years of double-digit percentage point rises in household income are finally tipping the balance towards the domestically driven growth that Beijing has been striving for, to replace fickle foreign demand for exports and inefficient investment spending that fuels property bubbles, as the key underpinning to the economy. Total retail sales were 26.2 trillion yuan (HK$32.7 trillion) in 2014, up 11.9 per cent in nominal terms - the level which has held fairly steady for the past couple of years. Car sales were up 6.1 per cent year on year from 2 per cent previously and purchases of household appliances accelerated by 12.6 per cent in December versus a year ago from November's 11.3 per cent pace. All of which bodes well for a consumer economy that is currently in transition. Physical goods are still high on the shopping list, but Beijing has been gradually shifting policy to withdraw subsidies to home appliance buyers in rural areas, while encouraging the purchasing of services through the expanding of both pension and health care insurance and also cutting taxes for small and microbusinesses. A study by market research firm Nielsen China shows that consumer confidence has held steady in the face of a broadly slowing economy. The firm's consumer confidence index held steady at 111 in the third quarter of last year, the latest reading, compared to an average of 98 among global consumers. "Chinese consumers are relatively optimistic about their employment and income prospects. We estimate they will hold a similarly optimistic attitude for this year if the economy keeps on a normal track," said Georgia Zhuang Jia, vice-president of Nielsen China. Looking forward, increasingly affluent Chinese consumers will shift more domestic spending from staple goods to personal care products, consumer appliances, entertainment, tourism, healthcare, insurance and elderly care services.