Premier Li Keqiang signaled on Thursday that the lowest rate of growth in a quarter of a century is the "new normal" for China, the world's second-largest economy.
Speaking at the opening of the country's annual parliamentary meeting, Li announced a growth target of about 7 percent for this year, below the 7.5 percent goal that was narrowly missed in 2014.
"Development requires an appropriate growth rate," Li told around 3,000 delegates gathered at the Great Hall of the People in Beijing. "At the same time, China's economic development has entered a new normal," he added.
The annual full meeting of the National People's Congress is a colorful event that draws delegates from all over China, some in traditional ethnic costumes, to the vast hall — a monument to 1950s Communist architecture. Its role is largely to endorse policy decisions already agreed by the party hierarchy.
Li stressed the need to put the economy on a more sustainable footing after three decades of breakneck growth. The premier said priorities included pushing ahead with reforms of giant state-owned enterprises that still bestride the economy and liberalizing the banking system and financial markets.
Outlining the government's policy priorities for 2015 in a Chinese equivalent of the U.S. State of the Union address, Li said the country's economy had been weighed down by a cooling property market, high debt levels and excess factory capacity.
A key plank of China's reform agenda is tackling overcapacity in heavy industries and moving its factories up the global value chain — focusing on quality rather than quantity.
"Manufacturing is traditionally a strong area for Chinese industry," said Li. "We will implement the Made in China 2025 strategy, seek innovation-driven development, apply smart technology, strengthen foundations, pursue green development and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality."
China's economy grew 7.4 percent last year, robust by global standards but its slowest rate in 24 years. With deflationary pressures mounting after a tumble in commodity prices, Li said China would lower its 2015 inflation target to about 3 percent, from 3.5 percent in 2014.
Li also promised a greater role for private business in the economy, which he said would be further opened up by halving the number of industries in which foreign investment is restricted.
A draft foreign investment catalog issued in November trimmed the number of sectors where China limits foreign investment to 35 from 79, but foreign business lobbies said that cut fell short of expectations.
"We look forward to seeing details of the revised catalog and streamlining measures, and share the premier's hopes for a stable, fair, transparent and predictable business environment in China," James Zimmerman, chairman of the American Chamber of Commerce in China, said in response to Li’s remarks.
With Communist Party leaders ever mindful of social stability, Li said China aimed to create more than 10 million new jobs in 2015 and would ensure the jobless rate does not exceed 4.5 percent. China targeted a registered urban unemployment rate of 4.6 percent last year.
The fight against pollution and corruption have contributed to the slowing economy, as Beijing has clamped down on dirty industries, and the fear of being caught in the anti-graft net has had a chilling effect on some business activity.
But in the longer term, the Communist Party leadership regards tackling the twin side-effects of China's decades-long dash for growth as vital to maintaining its grip on power.
"Our tough stance on corruption is here to stay," said Li. "Our tolerance for corruption is zero, and anyone guilty of corruption will be dealt with seriously."