“Large-scale tax and fee reduction means we will be touching the government’s own interest, cutting into our own flesh,” Li said during his annual press conference after the National People’s Congress meetings finished in Beijing.

Li said governments at all levels would have to make bold and courageous sacrifices, “turning the blade inward” and “cutting our own wrists” so that China could carry out the measures.

The premier has said that China aimed to save 2 trillion yuan (US$297.56 billion) this year for corporate taxpayers by lowering value-added tax (VAT) and their social security payments for employees.

It is not known when the new tax rates will take effect, but analysts said they expected them to begin soon.

On Friday, Li said government belt-tightening was the solution. “We will not only reduce spending in the public budget, we will also ask specific financial institutions and state-owned enterprises to contribute more of their profits to the state coffers,” he said.

Tang Jianwei, chief macro analyst with the Bank of Communications, said implementation at the local level would be vital for the tax cut plan.

“It could also be an opportunity to force local governments to make changes,” Tang said. “According to my own study of government expenditure last year, there is room to make spending cuts of 2 trillion yuan.”

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The measures are aimed at boosting employment – an important area for ensuring social stability – and it is the first time Beijing has given jobs growth the same prominence as its monetary and fiscal policies in managing the economy.

“We will ensure more than 11 million new jobs are created this year,” he said. “Actually, we hope the number will be the same as it was last year – which was 13 million [new jobs].”

Shen Jianguang, chief economist at JD Digits, a unit of e-commerce firm JD.com, said the emphasis on jobs reflected Beijing’s deep concerns about stability.

“A high unemployment rate could bring many risks to the [Communist Party’s] authority,” Shen said. “China faces a labour shortage, and there are still many concerns about structural unemployment. A large increase in the supply of new graduates could exacerbate the problem.”

Speaking at a separate press conference on Friday, Guo Wei, vice-director of the Research Office of the State Council, who was involved in putting together the work report, said securing a job was “the most fundamental factor for people’s livelihoods”.

He said a slew of policies would be announced to address the employment problems of university graduates, retired soldiers, migrant workers and people working for struggling companies.

“Only when employment is well handled can the country be stable and harmonious,” Guo said.

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While Li’s focus was on jobs, he chose not to talk about the other risks to social stability. He took 17 questions – carefully screened in advance – from Chinese and foreign journalists, but did not touch on sensitive topics such as Xinjiang or Tibet. This year marks the 60th anniversary of the exile of Tibetan spiritual leader the Dalai Lama, as well as 10 years since deadly clashes in Xinjiang.

China’s stance on the crisis between India and strategic ally Pakistan over the disputed Kashmir region was also not discussed, nor were there any questions on the contested South China Sea.

Additional reporting by Guo Rui