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.
Mr. Li set this year's growth target at 6 to 6.5%, reflecting official determination to shore up a cooling, state-dominated economy and prevent politically unsafe job losses in the face of US tariff hikes and weaker global demand.
The government has also set a consumer inflation target of around 3 per cent, Li said in his report at the opening of the National People's Congress (NPC) today, despite a recent softening in price rises to less than 2 per cent, leaving space for Beijing to stimulate consumption.
Li also warned at the congress meeting that the trade war with the us has had a negative impact on business activities in China.
But Mr Li pledged to keep the Chinese economy on a secure footing with an array of stimulus measures including diversified export markets, billions of pounds worth of tax cuts and increased infrastructure spending.
China isn't the only economy that has reported slower growth.
Li said the Chinese government will "improve the exchange rate mechanism" and keep the yuan "generally stable and at an adaptive and balanced level".
"The government must act with resolve to hand over matters it shouldn't manage to the market, and make maximum reductions to its direct allocation of resources".
Relations with the United States deteriorated sharply a year ago after President Donald Trump hit roughly half of Chinese imports with new tariffs in an attempt to force trade concessions.
As talks continue, Washington said late last month that it has suspended the planned increase indefinitely following Trump's decision to extend the March 1 deadline, with speculation rife that Xi and Trump may hold a summit later this month. But the US insists on sweeping reforms in China's economic policies, including those that govern intellectual property rights and technology transfer.
Every year, China's premier delivers a Work Report at the Two Sessions meetings, which acts as a policy agenda for the coming year.
Trump, who ran his presidential campaign with the "Make America Great Again" slogan, has criticized the plan, with the USA government having targeted Chinese goods containing technology related to it in the tariff war.
The country's economic growth has recently slowed, in large part because of the trade war with the US.
China's military spending grew by 7.6 per cent in 2016, and 7 per cent in 2017.
China aims to increase lending to small companies by large commercial banks by more than 30 per cent this year, the premier said.
The hike comes as Beijing steps up its efforts to assert its vast territorial claims in the disputed South China Sea. The remote islands are called Diaoyu in China.
"We faithfully honor our commitments and are resolute in safeguarding our lawful rights and interests", he added.