"The projected economic growth rate will be around 7 per cent this year," Zhu told the opening session of the National People's Congress.

"Achieving this growth rate through optimising economic structure and improving quality and economic performance will not be easy, but it is predicted that it can be achieved with diligent effort."

China's gross domestic product rose to 7.8 per cent last year, helped by a government spending binge on infrastructure.

Zhu said the 1999 budget deficit would surge 56 per cent to 150.3 billion yuan ($18.2 billion) as China once again spent heavily to spur the economy.

"The external economic environment we are facing this year is still quite grim," he said. "Domestically, it will be hard for the time being to greatly expand consumer demand."

The Asian economic crisis hasmade Chinese exports less competitive as other regional currencies tumbled against the US dollar. Domestic consumption has also been slack as workers unsure of their future stash money in the bank instead of spending it.

But Zhu said China's promise not to devalue its currency in 1998 was a wise decision and Beijing would stand by its pledge this year.

"Experience has shown that it was entirely correct not to devalue the renminbi (yuan)," he said. "A stable renminbi contributes not only to economic stability and development in China but also to financial and economic stability in Asia and even the world as a whole."

Delegates to the NPC said the no-nonsense premier had set himself a monumental task this year as the number of laid-off workers swells and reforms to ailing state firms slow.

"There are many difficulties this year," said one delegate, who declined to be identified.

"The key problems are laid-off workers and state enterprises," he said. "The easy problems have all been solved. Only thedifficult ones remain."

Zhu admitted frankly there was a lot wrong with the economy. "Financial discipline is lax and the economic order is somewhat in disarray," he said.

China's drive to reform state enterprises has slowed due to worries over social unrest from a growing army of unemployed. But Zhu stuck to his timetable that China would help the majority of its money-losing state firms out of their plight by 2000.

"The year 1999 is a crucial year for achieving this objective," he said. "So long as we work together and do solid work, we are confident we can achieve our reform and development objectives for state-owned enterprises."

China's creaky banking system was a special concern as the Asian crisis highlighted the need for risk control, Zhu said.

Beijing shut a major domestic financial institution, the Guangdong International Trade and Investment Corp, last year for inability to pay debt.

"With the impact of the Asian financial crisis widening, the world's financial markets in turmoil anddeep-seated problems in our own country's economic activities gradually emerging, improvement in the peformance of China's financial sector is of vital importance to the overall interests of reform, development and stability," he said.