Li, who is the deputy to president Xi Jinping, said China’s economic growth would be between 6% to 6.5% this year, down from 6.6% in 2018, during his opening speech at the annual National People’s Congress.
The country’s economic growth has recently slowed, in large part because of the trade war with the US.
Li said today: “In pursuing development this year, we will face a graver and more complicated environment as well as risks and challenges... that are greater in number and size.
"We must be fully prepared for a tough struggle."
He laid out plans to boost spending and increase foreign companies’ access to its markets.
He told the 3,000 delegates at the congress that China would deliver nearly 2 trillion yuan ($298bn) of cuts in taxes and other company fees.
A value-added tax for transportation and construction sectors will be sliced from 10% to 9% and VAT for manufacturers will fall from 16% to 13%.
China will also boost its military budget by 7.5% to 1.2trn yuan, down from last year’s 8.1% rise – which was the largest spending increase in three years.
Due to greater fiscal support to the economy, the government budget deficit in 2019 is expected to widen to 2.76trn yuan, representing 2.8% of China’s GDP, Li said.
The budget deficit last year accounted for around 2.6% of GDP.
“These arrangements meet the demands of spending across various areas, send a signal of proactive and vigorous fiscal policy, help to better guide enterprise expectations, more strongly boost market confidence, and also take into consideration the importance of keeping policy options open in case there is a need to respond to risks in the future,” the premier said.
