By Agencies

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China's prime minister has opened the 10-day annual session of the country's nominal state parliament by cutting projected growth for the country to 7.5 per cent and pledging increased government spending in an effort to increase domestic consumption.

Wen Jiabao told the National People's Congress (NPC) on Monday that his government would follow a "cautious but flexible" course in monetary policy in order to protect the country from financial risks.

Analysts had expected China's gross domestic product (GDP) to expand by a maximum of 8.5 per cent this year, continuing a downward trend from 10.4 per cent in 2010 to 9.2 per cent in 2011.

In the speech, Wen offered a range of increased assistance and social security programmes, including higher minimum wages, heftier subsidies for education and farmers, more loans for private businesses and added help for troubled exporters. He also called for more paid holidays for workers and expanded consumer credit.

The aim, Wen said, was to help China weather a shift as it looks for new engines of domestic growth while its main markets in Europe and the United States struggle and demand for jobs in China continues to increase.

"Internationally, the road to global economic recovery will be tortuous," Wen told the congress in the Great Hall of the People in Beijing.

"Domestically, it has become more urgent but also more difficult to solve institutional and structural problems and alleviate the problem of unbalanced, unco-ordinated and unsustainable development." 

He said the government would aim for more sustainable, energy-efficient development driven by domestic consumption.

While the annual gathering of congress is a largely procedural affair, this year's session is being watched with interest with older leaders such as Wen and Chinese President Hu Jintao expected to make way for a younger generation of Communist Party leaders.

Referring to recent anti-government protests and unrest in Tibet and the Uighur-majority province of Xinjiang, Wen called for social stability to be preserved.

"China is a unified multiethnic country," said Wen. "Only when its ethnic groups are united as one and work for the development of all can China achieve prosperity."

Li Zhaoxing, the congress' spokesman, on Sunday said China planned to increase its military budget for this year by another 11.2 per cent, following similar large increases in recent years.

Li defended the planned rise as a "reasonable and appropriate growth of defence spending."

He said China was committed to "peaceful development" and would "not in the least pose a threat to other countries."