China faces a "graver and more complicated environment" with risks that "are greater in number and size", Li said before 3,000-plus delegates at the two-week gathering of parliament.
Speaking in Beijing's Great Hall of the People, Li warned of the challenges the world's second-largest economy faced and pledged to keep it on a safe footing with an array of stimulus measures.
A longer-term campaign to curb polluting and low-value industries also slowed China's vast manufacturing sector.
Li said the business environment still fell short of market entities. Beijing will cut the rate of value-added tax (VAT) for manufacturers to 13 percent in 2019, from the current level of 16 percent.
Li also mentioned that, over the period of two years, China is to reduce or lower some charges for railway and ports.
Downward pressure on the Chinese economy continues to increase, growth in consumption is slowing and growth in effective investment lacks momentum, Li said, outlining the reasons for China's downward trend from the heyday of double digit growth in 2010.
Li Keqiang noted that the government will ensure that general-benefit tax cut policies issued at the start of the year for small and micro businesses are put into effect.
He added that China-US economic and trade frictions "had an adverse effect on the production and business operations of some companies and on market expectations".
China spends more and more money on its military each year, but this year that growth rate will slow. At the same time, it will cut the social security fees paid by companies.
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Trump has complained that a stronger dollar has weakened his hand in his trade wars and put a damper on United States growth. If the tariffs continue, about US$165 billion worth of trade would be redirected each year, they added.
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The deficit of China's state budget will be 2.76 trillion yuan (about $411.5 billion), or about 2.8 percent of the country's gross domestic product (GDP), according to the draft budget.
Li said on Tuesday monetary policy would be "neither too tight nor too loose" and that the government would not resort to a flood of liquidity.
President Xi Jinping's government is expected to use this year's session to announce tax cuts and more support for entrepreneurs who generate much of China's new jobs and wealth.
To support private and smaller firms, Li said Beijing will step up targeted cuts in the reserve requirement ratio for smaller and medium-sized banks with an aim to boost lending to small companies by large banks by more than 30 per cent.
Shadow banking risks will be resolved in an orderly way, and China will steadily deal with local government debt risks, the NDRC said.
Relations with the United States remain tense with military sabre-rattling across the disputed South China Sea, allegations of spying against Chinese telecoms giant Huawei and continuing scrutiny of Beijing's record on human rights doing little to help negotiations aimed at resolving the stand-off over trade between the world's two biggest economies.
Of China's 31 provinces, regions and municipalities, 24 have already lowered their growth targets for this year, especially export-driven coastal areas.
"They need to strike a balance between boosting economic activity and not restarting another debt-fuelled boom", said Tai Hui of JP Morgan Asset Management.
China is committed to mutually beneficial cooperation, win-win development and settling trade disputes through discussion as equals, the report said.