BEIJING -- China's economic growth is likely to stand at 7.6 percent this year, slightly down from 7.7 percent in 2012, said a State Council report on Wednesday.

Economic growth has been higher than expected since 2011 despite a declining trend, said a mid-term evaluation report on the implementation of the 12th five-year development plan (2011 to 2015).

The report was submitted by the State Council, China's cabinet, to the bi-monthly session of the Standing Committee of the National People's Congress (NPC).

The five-year plan set an annual growth target of gross domestic product (GDP) at 7 percent between 2011 and 2015. GDP growth was 9.3 percent in 2011, 7.7 percent in 2012 and 7.6 percent in the first half of this year, according to the report.

"We can not deny a downward pressure on economic growth," said Xu Shaoshi, minister in charge of the National Development and Reform Commission (NDRC), when briefing lawmakers about the report.

There are uncertainties in global economic recovery and the international market has failed to produce strong demand, Xu said.

At home, labor cost increases and environmental costs to enterprises are catching up, which challenges the traditional growth pattern, he said.

The economy is also challenged by increasing risks in local government debt, the financial sector and overcapacity, which resulted from blind government investment in industrial projects.

Investing a large amount of funds in low-profit infrastructure projects, industries with excess capacity and real estate projects has reduced liquidity and efficiency, Xu said.

The report also listed several other challenges ahead, including slow economic restructuring, worsening pollution and social conflicts among interest groups.

The State Council said the solution is comprehensive reform in various sectors to realize the market's decisive role in allocating resources and improve government performance.

To avoid big economic fluctuations, China will further enhance the flexibility of interest rates and coordinate fiscal, monetary, industrial, land use and environmental policies, according to the report, and carefully handle local government debt while ensuring reasonable needs for liquidity, the report said.

The government will continue cutting excess capacity in industries like steel, cement, electrolytic aluminum, glass and shipbuilding and stop the expansion of high energy user and high polluters.

To balance the development of regions, the government will work to remove market barriers across the country and reform public services that are tied to household registration.

PROGRESS FOR FIVE-YEAR PLAN

The State Council report said, in terms of most economic and social development targets set for 2015, progress has been better than expected.

Service sector contributed 44.6 percent of GDP in 2012, up from 43.2 percent in 2010. The target is 47 percent by 2015.

Urbanization reached 52.27 percent in 2012 while the target is 51.5 percent by 2015.

In 2011 and 2012, the annual disposable income of an urban resident and net income of a rural resident both grew faster than GDP.

The annual disposable income of an urban resident stood at about 24,500 yuan (3,951 U.S. dollars) in 2012, up from 19,100 yuan in 2010. The target for 2015 is 26,810 yuan.

The annual net income of a rural resident reached about 7,900 yuan in 2012, up from 5,900 yuan in 2010. The target for 2015 is 8,310 yuan.

The income gap between urban and rural residents shrank from 3.23:1 in 2010 to 3.10:1 in 2012, the report said.

In 2012, China's education budget for the first time accounted for more than 4 percent of GDP.

Wednesday's meeting was presided over by Zhang Dejiang, chairman of the NPC Standing Committee. Later Wednesday afternoon, chairman and vice chairpersons of the NPC Standing Committee met to review proposals and opinions submitted by lawmakers.