Hobbled by a surging national debt and a months-long standoff with the U.S., Beijing has announced lower growth targets and a major tax cut as economic planners aim for a gradual deceleration of China's economy this year.

In a report to the National People's Congress, Premier Li Keqiang said Tuesday that the country's economic planners have set a gross domestic product growth rate of 6 to 6.5 percent this year.

For this year, Beijing has arranged a national economic agenda built around manageable debt risks, a sustainable environment and the alleviation of poverty.

"These targets accommodate structural deceleration but not cyclical, which means that policymakers will need to flex their muscles to stimulate the economy," Alicia Garcia Herrero, a senior economist at Natixis SA, told Bloomberg.

"It’s good news for the market in the short term, bad news for China in the medium term as more leverage will need to be piled up."

Li said the Chinese government would see tax cuts worth $298 billion to encourage spending as the economy slows.

The U.S. and China are reportedly close to a trade deal. But the U.S. insists on sweeping reforms in China's economic policies, including those that govern intellectual property rights and technology transfer. U.S. trade negotiators have also demanded that China buy more of America's products.

China had earlier offered to buy some $30 billion in U.S. farm products each year as part of the possible trade deal between the two nations.

Faced with these demands, along with burgeoning debt and dwindling consumer spending, Beijing sees a difficult year for the world's second biggest economy.

"China will face a graver and more complicated environment as well as risks and challenges that are greater in number and size," Li told the National People's Congress.

Still, Chinese stocks continued to rise on Tuesday, a day after soaring to their highest level since June. Other Asian indexes fell as the S&P 500 Index saw stocks plunge to their lowest in a month.

Economists surveyed by Bloomberg expect the economy to slow to 6.2 percent this year. The country managed an economic growth rate of 6.6 percent in 2018.

Policymakers are trying to encourage lending to the private sector as they attempt to steer the country clear of an accelerated accumulation of debt. China's debt is now three times the size of country's domestic output. Beijing declined to specify its targets for retail sales growth or fixed-asset investments in Tuesday's report.

Li said the Chinese government will "improve the exchange rate mechanism" and keep the yuan "generally stable and at an adaptive and balanced level."

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