A general view inside the Great Hall of the People during China’s Premier Wen Jiabao’s speech in the opening ceremony of the National
A general view inside the Great Hall of the People during China's Premier Wen Jiabao's speech in the opening ceremony of the National People's Congress in Beijing, March 5. (Reuters/Kim Kyung-Hoon)
BEIJING - China's military spending will grow by 10.7 percent this year - a notable increase in the face of sluggish economic growth - according to official reports delivered Tuesday at the kickoff of a two-week meeting that will culminate in the elevation of China's new president and premier.

The military increase continues nearly two decades of double-digit growth and comes at a critical time as the incoming leaders are consolidating their power and shoring up personal relations with China's generals.

Leaders also set their target for China's economy to grow 7.5 percent this year, a number unchanged from last year and modest compared to previous decades of furious growth. The goal reflects belief that the effects of China's economic slowdown will likely linger in the coming year.

The latest figures delivered by China's outgoing Premier Wen Jiabao opened the National People's Congress, an annual parliamentary meeting comprised of highly choreographed speeches, press conferences and rubber stamp votes for initiatives laid out by the ruling Communist Party. The meeting is expected to end on March 17 with party leader Xi Jinping becoming China's new president.

Wen's remarks included standard praises for the past year's work but sprinkled with admissions of problems he and President Hu Jintao were leaving their successors: unsustainable development, corruption, pollution, innovation stifled by dominant state-owned enterprises, income disparity and the gap between rural and urban development.

"We are keenly aware that we still face many difficulties," Wen said, acknowledging that some "have been caused by inadequacies and weaknesses in our government work."

The report sets up the possibility of economic, government and social reforms that Xi and others new leaders have been promising in recent months. But many experts and even some within the party believe substantive changes may prove difficult to deliver in a system geared toward the entrenched interests of government officials, China's state companies and those with political connections.

As China's next president, Xi has spent recent months quickly shoring up a power base among the military, according to experts and officials with ties to the military.

China's projected military budget at $115.7 billion still pales in comparison to the U.S. military's $656.2 billion budget in 2012, a point made by several Chinese military officials and experts in interviews on Tuesday. But U.S. experts have long believed China under reports its military spending in its annual reports. The increase also carries strong symbolism, continuing recent years of rapid modernization of China's forces even as the U.S. and other Western powers are struggling with budget cuts. And it bolsters an increasingly aggressive foreign posture China has toward its neighbors, especially in territorial disputes with countries like Japan.

Like many in the military, Luo Yuan, a major general and deputy secretary-general of the Military Science Society, downplayed the increase and any possible intimidation to neighboring countries.

"Our foreign policy goal is peaceful development and strengthening defensive abilities rather than growing our ability to plunder others," he said.

On the economic front, Wen emphasized China's broader long-term strategy of weaning the country's dependence away from exports by increasing domestic consumption.

Some experts interpreted the modest 7.5 percent target for GDP growth as a signal by the central government to provincial leaders that GDP increases are no longer the only priority after years of single-minded development have resulted in rampant pollution and other problems.

To reign in property prices and a possible housing bubble, leaders also have said in recent days they plan to tighten curbs such as implementing a 20 percent tax on property sales. That news over the weekend sent Chinese stocks into a sharp decline on Monday.

Economic reform is seen by leaders as a necessary, but tricky proposition, said Shen Jianguang, chief economist at Mizuho Securities Asia in Hong Kong.

Too much change too quickly risks upsetting China's economic system, he said. "The government also worries that if the economy faces a hard landing, that could trigger other things like social unrest."

Other reforms expected to be discussed at the people's congress include a consolidation of some government ministries into a more streamlined group of "super ministries" as well as possible reform of China's widely despised labor camp system. But former officials and analysts said more ambitious earlier proposals on both fronts seem to have been scaled back in recent days.

Analysts are also closely watching several high-ranking personnel appointments in coming days for clues about who may be positioning for a seat in coming years on the party's top ruling standing committee.

Zhang Jie and Wang Juan contributed to this story.