A man flies kite at The Bund on December 5, 2013 in Shanghai. China's premier has promised a 'war' on pollution. 2013 Getty Images

Chinese Premier Li Keqiang on Wednesday said he is "declaring war" on pollution, describing it as a "red-light warning" against inefficiency as he sought to address public concerns on issues from acrid smog to food safety.

In his first annual policy speech, he also promised to crack down on terrorism and promote unity among the country’s ethnic minorities.

Li's speech at Wednesday's opening of China's annual ceremonial legislature comes as the government confronts ethnic unrest in the far western region of Xinjiang that has intensified over the past year. On Saturday, China saw the first big terror attack outside Xinjiang blamed on militants from that region — a knife slashing attack at a train station in Kunming that killed 29 people and wounded 143.

Li, who took office in March last year, emphasized that China's many ethnic groups were all "equal members of the Chinese nation," an indirect response to frequent complaints by minority Uighurs and Tibetans that they are discriminated against for jobs, passports and bank loans and unfairly subject to intense surveillance. However, he did not indicate any intention on the government's part to review its ethnic policies in Xinjiang and Tibet. Critics say Beijing's policies of encouraging the migration of majority Han and imposing restrictions on religion and language have fueled unrest and tension in recent years.

Much of Li's report served to further define priorities that had been outlined after a party policy meeting in November, which included plans to make the world's second-largest economy more open and competitive.

He promised changes in banking and finance that reform advocates say are essential to making the economy more efficient and productive.

Banks will be given more control over lending and interest rates, the premier said. That would allow profitable companies to compete for credit by paying higher rates, possibly channeling more money to entrepreneurs who generate most of China's new jobs and wealth but are mostly unable to get loans from the state-run system. It also might boost rates paid on savings, putting more money in the pockets of Chinese families and encouraging consumer spending.

The premier also threw the government's support behind the growth of popular new Internet-based banking services, promising to promote their "healthy development."

He announced an official growth target of 7.5 percent for this year and pledged that Beijing will encourage competition, ease exchange rate controls and improve access to credit for productive businesses. Last year, the economy grew 7.7 percent, the same as in 2012, which was the slowest rate of growth since 1999, and the 7.5 percent goal came after the government announced on Saturday that a key manufacturing index had slipped to an eight-month low in February.

The government also released details on its budget, announcing a 12.2 percent increase in military spending to $132 billion. That followed last year's 10.7 percent increase to $114 billion, giving China the second-highest defense budget for any nation behind the United States, which spent $600.4 billion on its military last year.

Continued military spending has generated concerns about how China intends to use its newfound power amid a rise in tensions with its neighbors over the country's territorial claims.

But it was Li's words on pollution that drew initial attention. In addressing the widespread and very public complaints about pollution, Li took on a topic that has received much negative international attention. He referred to the fouling of the country's air, water and soil as "nature's red-light warning against the model of inefficient and blind development."

"We will declare war against pollution and fight it with the same determination we battled poverty,"

The government will shut down 50,000 small coal-fired furnaces this year, clean up major coal-burning power plants, and remove six million high-emission vehicles from the roads, he said.

A cap will be put on the country's total energy consumption and measures will be taken to curb water pollution, conserve soil, recover wetlands and restore forests and grassland, he added.

Chinese authorities have repeatedly pledged action to improve the environment in recent months, but experts warn that implementation will be key.

"The fundamental goal of a government's work is to ensure that everyone lives a good life," Li said. "We will definitely enjoy more peace, happiness and prosperity as well as greater development."

In an apparent response to worries over the country's scandal-prone food industry, Li promised to crack down on the production and sale of counterfeit and shoddy goods, improve safety-monitoring systems and introduce tracing mechanisms.

"We will ... apply the strictest possible oversight, punishment and accountability to prevent and control food contamination and ensure that every bite of food we eat is safe," he said.

Wire services