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Li Daokui, a political adviser, saidthat raising the government deficit-projected to be 2.18 trillion yuan ($335 billion) for 2016 - is a "prudent and rationalmove".

"As China's economic transformationis a difficult process, it needs to havemore fuel added like a vehicle," he said.

In addition to proactive fiscal policy, the premier said the country would ramp up supply-side structural reform to drive sustained growth.

This will include efforts to streamline administration, transformthe functions of the government and improve its performance, and ensure that innovation-driven development holds sway.

The country will create 10 million new jobs, address socalled zombie companies through mergers, bankruptcies and debt deals, and hold the urban registered unemployment rate below 4.5 percent this year, he said.

State-owned enterprises beleaguered by inefficiencies and overcapacity will be restructured, with some reorganized, merged or forced to exit themarket, he said.

The premier also promised to open oil and telecomindustries to private competitors in sweeping industrial reforms, and to speed up urbanization.

"We will significantly relax restrictions on entry into markets such as electricity, telecom, transportation, petroleum, naturalgas ... and encourage private companies to increase investment in these areas and to participate in the reform of State firms," he said.

Private competitors will be afforded the same treatment that State-owned enterprises are entitled to in terms of project approval, financing and land availability.

The premier also announced a raft of growth-supportive measures, including investment in infrastructure.

The country will invest 1.65 trillion yuan on road construction and 800 billion yuan on newrailways, according to the Government Work Report.

Huang Shouhong, deputy director of the State Council Research Office who participated in drafting the Government Work Report, said he believed the issue of laidoff workers following the overcapacity cuts would not be so pressing as some analysts have feared.

"Development of the service industry can provide far more jobs than development of other industries,"Huang said.

Li Xiang contributed to this story.