China announced a growth target of 7.5% and revealed plans to raise its defence budget by 12.2%, as it opened its annual parliament session in Beijing.
Premier Li Keqiang said that economic development was the central task of the government, but “painful structural adjustments” were needed.
Japan expressed concern at the defence budget announcement, saying there was a “lack of transparency”.
The congress marks one year since Xi Jinping was confirmed as president.
The 10-day meeting of around 3,000 legislators from delegations across China began on Wednesday.
China describes the NPC as the country’s “supreme organ of state power”. It has the power to enact and amend legislation. In practice, it is generally considered a rubber stamp for the ruling Communist Party.
As parliament opened Premier Li Keqiang presented a work report highlighting targets for China’s economy this year.
He said that the government’s “work got off to a good start” but admitted that “there are still many problems that people are unhappy about”.
“Painful structural adjustments need to be made” in China’s development, he said, though economic growth would remain stable.
According to the speech, the government will aim to keep inflation at about 3.5%, while boosting domestic growth and carrying out “people-centred urbanisation”.
The growth and inflation targets were widely expected. The growth rate target in 2013 was also 7.5%.
Correspondents say the fact that the growth target for 2014 has not changed will lead some to question how serious China is about embracing economic reforms, which would involve lowering the growth rate.
According to Mr Li’s speech, reforms were the “top priority” for the government and had entered “a critical stage”.
“We must rely on the people, break mental shackles and vested interests with determination as great as a warrior cutting his wrist, and deepen reforms in all fronts.”
Implementing reforms to tackle local government debt was also expected to be a priority.
‘Matter of concern’
The latest military budget boost comes amid tensions between China and many of its neighbours, including Japan and the Philippines, over disputed territories.
China has consistently announced double-digit increases to its official military budget in recent years. Analysts say its total military spend may in fact be higher.
However, China points out its defence budget is much smaller than that of the US.
China has also accused Japan of failing to adequately address its actions in World War Two.
In Wednesday’s speech, Mr Li said: “We will safeguard the victory of World War Two and the post-war international order, and will not allow anyone to reverse the course of history.”
apan’s Chief Cabinet Secretary Yoshihide Suga told reporters on Wednesday the lack of transparency in China’s defence policy had “become a matter of concern for the international community, including Japan”. ‘Red light warning’
Issues such as targeting corruption and the environment are also on the agenda at the National People’s Congress.
Premier Li Keqiang told delegates the government would “declare war” against pollution, fight corruption “without mercy”, and “crack down hard” on terrorism.
President Xi Jinping has launched a high-profile crackdown against corruption since coming to power last year.
Mr Li admitted the toxic smog hanging over many Chinese cities was “nature’s red light warning against the model of inefficient and blind development”, the BBC’s Celia Hatton in Beijing reports.
In many urban areas, including Beijing, pollution levels routinely exceed the safety limits set by the World Health Organisation (WHO).
Security at the congress was tight in the wake of a mass stabbing attack at a railway station in Kunming, south-west China.
Eight attackers stabbed people at the station at random on Saturday, killing 29 and wounding more than 130.
Delegates held a moment of silence for the victims of the attack as the NPC opened.
Officials have blamed separatists from Xinjiang – which is home to the Muslim Uighur minority – for the attack.
On Wednesday morning, two protesters were dragged away from Tiananmen Square, near the venue for the NPC, by policemen. It is not clear what they were protesting about.