Premier Li Keqiang on Thursday warned "formidable difficulty" in 2015, setting a slower growth target, but stressed his confidence in the ongoing reform to start new development engines.

The annual government work report, delivered by Li at the opening meeting of the national legislature's annual session, set this year's economic growth target at 7 percent, lower than last year's target and the 7.4-percent actual growth in 2014.

Other economic indices such as consumer price index (CPI), set at 3 percent, and unemployment rate at 4.5 percent are also slightly lower than last year.

Predicting the situation in 2015, the Premier admitted that the difficulties China is to face may be "even more formidable" than last year, with downward pressure on the economy building up and deep-seated problems in development surfacing.

Summarizing weaknesses in 2014's work, Li listed sluggish investment growth, relatively damp consumer demand, increasing labor cost, inefficient growth model, overcapacity, weak rural infrastructure and serious pollution.

He also expressed dissatisfaction over the implementation of some policies and denounced laziness and corruption among a small number of civil servants.

However, Li said he is "fully confident" as China's development has enormous potential and is hugely resilient, with ample room for growth.

The Premier stressed that the growth rate is "both aligned with our goal of finishing building a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy."

Considering the size of China's economy, gross domestic product (GDP) worth of 63.6 trillion yuan (10.39 trillion US dollars) in 2014, even the growth of 7 percent will produce an annual increase of more than 800 billion US dollars at current price, larger than the figure produced by a 10-percent growth five years ago, said Fan Jianping, chief economist for the government think-tank State Information Center of China.

David Dollar, senior fellow with John L. Thornton China Center under US think-tank Brookings, told Xinhua that it is realistic for China's economy to grow in the 6-7 percent range.

"I do not see that as a problem for China or the world, as long as the slowdown is gradual," Dollar said. "China will continue to provide a lot of demand for other economies, but the nature of that demand is changing."

Premier Li highlighted "dual objectives" of maintaining a medium-to-high level of growth rate and moving toward a medium-to-high level of development.

As for how to realize the goals, the solution presented in Li's report is dubbed "twin engines", which refers to popular entrepreneurship and innovation and increased supply of public goods and services.

In the report, Li has stressed the Party leadership headed by President Xi Jinping for five times while summing up the progress in 2014 and laying out the plan for 2015.

"Let us rally closely around the Party Central Committee with Comrade Xi Jinping as General Secretary, hold high the great banner of socialism with Chinese characteristics, and work together to break new ground," he said in the end.

The year of 2015 is considered a key one to realize the overall reform blueprint set by the leadership in 2013 and the first year since the legal reform plan was unveiled last October that aims to realize the rule of law in China.

It is also the last year for the government to meet the targets set by the country's 12th five-year national development plan, which range from people's livelihood to pollution control.

Other than voicing worry, China's business leaders have taken the new situation as an opportunity to change.

Jack Ma, executive chairman of the Alibaba Group, compared the country to a person whose height can't grow forever.

"When growing up, we will try to pursue wisdom. The Chinese economy is slowing down, but as long as we improve our business environment, people will show more understanding and support to new commercial models, and the economic growth will have a higher quality," Ma said.

Yang Yuanqing, chairman and CEO of Lenovo Group, who observed the meeting as a national political advisor, referred the country's situation to business changes of his own company.

"The 'new normal' of China's economy implies adaptation," he said. "Pressure has been there since we (Lenovo) enjoyed high speed of growth in the past few years. Now we need to find more new growth areas."

Nearly 3,000 NPC deputies from across the country attended the opening meeting along with top Party and state leaders Xi Jinping, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. The meeting was presided over by Zhang Dejiang, chairman of the National People's Congress (NPC) Standing Committee.

Dong Mingzhu, president of China's leading air conditioner maker Gree Group, was among the deputies in the Great Hall of the People.

"The government work report drew a blueprint for all Chinese," Dong said. "As a business person, I am inspired and would like to seize the opportunities."

US Ambassador to China Max Baucus, who observed the opening meeting, told Xinhua that he always hopes that the Chinese economy will do well in 2015 and the country has good, strong and robust GDP while people have well-paid jobs.

Removing policy barriers

The Premier stressed that systemic, institutional, and structural problems have become "tigers in the road" holding up development and, without deepening reform and making economic structural adjustments, China will have a difficult time sustaining steady and sound development.

To foster a new engine of growth, the country will need to draw the strength of the market, which has great potential in China with 1.3 billion people, 900 million of workforce and over 70 million enterprises and self-employed businesses.

Thursday's report fully responded to the principle set by the reform blueprint adopted in November 2013, which is to "transform the government function and let the market play a decisive role in allocating resources."

According to the report, the central government will continue abolishing or delegating powers to local governments and put in place a negative-list approach for market access.

The Premier promised to exchange less government power with more market vitality.

The country will expect easier policies on investment approval and pricing, more transparent budget management, faster financial reform and bolder restructuring of state-owned enterprises.

Local government officials, such as Xu Qin, mayor of southern Chinese city of Shenzhen, have felt the need of self reform.

An industrial park in Shenzhen has been included in the new free trade zone of Guangdong, one of the three approved late last year.

Xu, an NPC deputy, told Xinhua that, taking this as a change, the city will have reform measures in all aspects of government work, particularly the investment policies in financial and service sectors.

Smarter government spending

Admitting that traditional growth engine is weakening, Li said the government looks to upgrading traditional engines while creating new ones.

He promised to provide more public goods and services and increase government input in areas like education and health care, and encourage nongovernmental participation to improve the efficiency.

Government spending in infrastructure, a long-term drive of China's economy, still stands out in Thursday's report as Li earmarked 477.6 billion yuan as the central budgeted spending for 2015 as well as 800 billion yuan in railway construction, in addition to 27 new water conservancy projects.

However, the Premier stressed that the government does not intend to invest alone but attract more private investment into more areas.

Iron hand on pollution

Quite rare compared with previous government work reports, Thursday's report listed environment targets, together with gross domestic product (GDP) growth, unemployment rate and consumer price index (CPI), as the country's major development goals in 2015.

In 2015, Chinese government plans to reduce the energy intensity, or units of energy per unit of GDP, by 3.1 percent and continue reducing the emission of major pollutants.

Intensity of carbon dioxide is also set to drop at least 3.1 percent with other indices like chemical oxygen demand and emissions of ammonia nitrogen, sulfur dioxide and nitrogen oxides.

In strong word, the Premier pledged that polluters will "pay a heavy price" for illegal discharges.