China's premier today cut the economic giant's growth target to 7.5% for 2012 as he opened a parliament session focused on growth, stability and military might ahead of a leadership change.
Premier Wen Jiabao also said China must boost the capacity of its forces to fight wars on their own doorstep, as he delivered his opening address to the annual session of the National People's Congress (NPC), China's parliament.
The lower growth target, down from 8% last year, is an official acknowledgement that China's export-driven economy is slowing as Europe's debt crisis and the sluggish recovery in the US hurt demand for its goods.
The 2012 session is the last before a handover of power that begins later this year, and senior leaders are anxious to ensure the world's second-largest economy grows at a fast pace while keeping a lid on social unrest.
The Asian powerhouse expanded by 9.2% last year, slowing from a blistering 10.4% in 2010, as global turbulence and efforts to tame high inflation put the brakes on growth.
"We are keenly aware that China still faces many difficulties and challenges in economic and social development," Wen said in his annual speech at the opening of the 10-day gathering in Beijing's Great Hall of the People.
"There is downward pressure on economic growth. Prices remain high. Regulation of the real estate market is in a crucial stage," he added.
Expanding domestic demand was a key focus this year, Wen said, announcing increased investment in low-cost housing, social security, education and higher wages as Beijing seeks to reverse "the trend of a widening income gap".
China typically exceeds the annual growth target unveiled every March, and most economists are predicting gross domestic product growth of 8-8.5% for China this year.
Wen vowed to maintain property restrictions introduced in the past two years to rein in surging property prices that had risen out of the reach of many ordinary Chinese.
The inflation target, meanwhile, was set at 4% for 2012, unchanged from last year, after consumer prices rose 5.4%in 2011. Inflation has the potential to trigger unrest in the country of more than 1.3 billion people and is a constant bugbear for China's stability-obsessed leaders.
Maintaining social stability is high on the agenda at the annual parliament meeting, attended by about 3,000 delegates from across the country.
Wen also highlighted the sensitive issue of government land grabs, a major cause of public unrest in China, where almost 50% of the population still lives in the countryside. He said farmers' rights to land "must not be violated".
He also said China should enhance the ability of its military to "win local wars under information age conditions", a day after Beijing announced its defence spending would top $100 billion in 2012 - an 11.2% increase on last year.
China's military budget has seen double-digit increases every year for much of the last decade, worrying the US, which is forging ahead with plans to expand its own military power in Asia.
