China’s premier Wen Jiabao has warned the country faces unprecedented challenges as a result of the economic downturn but promised growth would still be achieved.

In his annual address to parliament Mr Wen said there would be a $585 billion (£413 billion) stimulus programme and declared an annual growth target of eight per cent.

The premier also said he hoped to create an extra nine million jobs and increase local government budgets as ways of stimulating economic recovery.

“Maintaining and improving people’s lives is always the starting and end point of our economic work,” he said during his two-hour speech.

Mr Wen declared that in a developing country with a population of over a billion, maintaining a certain growth rate for the economy was “essential” for expanding employment, increasing people’s incomes and “ensuring social stability”.

The Chinese premier warned, however, that demand is continuing to shrink on international markets, with the trend towards global deflation now obvious.

“The external economic environment has become more serious, and uncertainties have increased significantly,” he said.

He also acknowledged that corruption remains a problem in China but vowed the government would “never allow any organisation or individual to exploit the surge in public spending for private gain”.

Mr Wen also said he remained optimistic that with the “right policies and appropriate measures” China could achieve its economic targets despite the global downturn.