Rise in China's defense budget to outpace economic growth target

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Li said the Chinese government would see tax cuts worth $298 billion to encourage spending as the economy slows. Last week, the United States also reported 2.9% GDP growth for 2018, which fell short of the 3% of the Trump administration.

The government aims to create more than 11 million new urban jobs this year and keep urban unemployment below 4.5 percent - unchanged from last year.

China's 7.5-percent increase in its annual defense budget in 2019, meanwhile, is faster than the pace of economic growth.

For this year, Beijing has arranged a national economic agenda built around manageable debt risks, a sustainable environment and the alleviation of poverty.

In recent weeks, the United States and China appear to have moved closer to a trade deal that would roll back USA tariffs on at least $200 billion worth of Chinese goods.

China will also boost its military budget by 7.5% to 1.2trn yuan, down from last year's 8.1% rise - which was the largest spending increase in three years. The report pledged a "noticeable decrease" in the tax burdens of major industries, with the total of reductions in tax and social security fees coming to 2 trillion yuan.

Premier Li Keqiang told the opening of the annual National People's Congress in Beijing's Great Hall that the country now faced a "complicated terrain of increasing dilemmas".

China announced Tuesday a 7.5 percent increase in military spending in 2019, lower than previous year as the country faces an economic slowdown, but still likely to make Asian neighbours nervous.

"We must be fully prepared for a tough struggle", Li told a delegation of almost 3,000 representatives.

Asked at a news conference about Beijing's response to Washington's increasingly hard-line policy toward China, Zhang said, "It won't get you anywhere to deal with new problems in the context of globalization with a Cold War mentality".

"Trade frictions between China and the USA have brought ill impact on the operations of some companies and on the market prospects".

China will use policy tools such as the reserve requirement ratio and interest rates in a timely way, stepping up targeted reserve requirement ratio cuts for smaller and medium-sized banks to support private and smaller firms, he said.

This year is the 70th anniversary of the founding of the People's Republic of China. This year, Li also did not announce any targets for growth in retail sales or fixed asset investment.

"Against the backdrop of mounting downward pressure on the economy, the policies and measures we adopt should ensure stable expectations, stable growth and structural adjustments", Li said.

The country's economic growth has recently slowed, in large part because of the trade war with the US.

Separately, China's top banking regulator said on Tuesday Beijing could "absolutely" reach an agreement with the United States on opening up its financial sector, even as the country's commerce minister admitted talks with Washington had been hard.

US Secretary of State Mike Pompeo said on Monday that the two nations are "on the cusp" of a breakthrough to end the trade war.