Chinese economy faces tough year ahead, Li Keqiang tells assembly

China's economy will face "even more formidable" difficulties this year than in 2014 as Beijing sets its lowest growth target in over 15 years to accommodate reforms.

Speaking at the opening of the nation's annual parliamentary meeting, Premier Li Keqiang vowed to implement the "Made in China 2025" strategy for innovation-driven development as well as tackle pollution, corruption and indolence among officials, and the "self-willed use of government power" - all of which hamper sustainable economic growth.

"With downward pressure building and deep-seated problems in development surfacing, the difficulties we are to encounter in the year ahead may be even more formidable," Li told about 5,000 members of the National People's Congress and Chinese People's Political Consultative Conference at the Great Hall of the People in Beijing yesterday.

He unveiled this year's gross domestic product target at about 7 per cent, lower than 2014's 7.5 per cent target, after the economy expanded just 7.4 per cent, the slowest in 24 years.

The Shanghai Composite Index fell 0.95 per cent yesterday to 3,248.48 points and the Hang Seng Index shed 1.11 per cent to 24,193.04 points, as economists said the government report did not offer solutions to counter the economic slowdown.

"The report failed to address crucial problems hampering China's sustainable growth," independent economist Andy Xie said. "In the short term, China should reduce taxes substantially to increase household income and boost consumption. In the longer run, it should restrict the spending of governments and state-owned enterprises."