Mr Wen's first NPC address marked a shift in emphasis

Wen Jiabao acknowledged that rapid industrial growth had left millions in the countryside relatively worse off.

The tax burden, he said, would shift from farmers, with reforms elsewhere aimed at rebalancing the economy.

BBC Beijing correspondent Louisa Lim says Mr Wen's annual work report speech signalled a clear shift of emphasis on economic issues.

Mr Wen also addressed the issue of Taiwan, restating China's opposition to independence for the island, but, in an overture of peace, also calling for renewed talks.

WEN JIABAO'S GOALS Growth of 7%, down from 9.1% in 2003 Cut taxes on farmers over next 5 years Spend $1.2bn on schooling in poor west For military, develop new, high tech weaponry Improve public health and sanitation Power to the people? Speech's key themes

On economic matters, the speech was unusually frank.

Mr Wen, in his first work report to China's parliament since he assumed office a year ago, said that the government was aware that some of its work fell short of expectations.

Among the problems he listed was the slow growth of incomes in the countryside, causing a rapidly-widening wealth gap between the richer coasts and the troubled hinterlands.

In addition, he said, people are complaining about the cost of schooling and medical care.

"Solving the problems of agriculture, villages and farmers is one of the most crucial parts of our entire work," Mr Wen said as he made his nearly two-hour speech to the 3,000 delegates with President Hu Jintao and former President Jiang Zemin by his side.

Mr Wen also pledged to fight corruption and spend more to modernise the military. He hinted at possible political reform, promising "to further expand democracy at the lowest levels of government".

Slowdown

Mr Wen said his government aimed to achieve 7% economic growth in 2004.

The downgrade from last year's breakneck 9.1% figure indicates an attempt to head off rising discontent from those left behind by China's economic boom.

A huge wealth gap is emerging between city and rural populations

A shaky legal framework and banks over-burdened by bad debts run up by state enterprises - as well as massive over-investment in some industries - have contributed to both the boom and the imbalance.

Restrictions on credit are part of the package of measures Mr Wen is now mandating.

Farmers will see taxes cut a percentage point a year, and scrapped entirely by 2009, he promised.

And agricultural investment would rise more than 20% or about 30bn yuan ($3.6bn), along with a 10bn yuan boost to direct subsidies to deal with sliding grain production.

During the parliamentary session, the constitution will be changed to allow private property ownership for the first time since the Communist Revolution in 1949.

Leaders of the ruling party have already endorsed this as essential for China's continued economic development.

Our correspondent says that the expected changes to property laws will mean that the Chinese Communist Party is, it seems, Communist in name alone.

Owning property in China was once enough to get landlords labelled as evil, our correspondent says. But now the Chinese constitution is to be changed to give more protection to private property, and those once condemned as "capitalist running dogs" are being welcomed into the party.