In line with the slower economy, China will raise defence spending by 6.6% this year, the slowest in three decades, while the budget for environmental protection will increase a modest 4%.
China will not set a specific target for economic growth this year - a sign of how much uncertainty the coronavirus pandemic has caused the world's second largest economy.
Before the pandemic, China was expected to announce a growth target of around 6 percent this year, allowing it to meet its key political commitment of doubling gross domestic product from 2010 to 2020.
Cyclists pass by workers delivering beverages near a mall on the streets of Beijing Tuesday.
The coronavirus has also dealt the economy a heavy blow, after the government instituted lockdowns to curb the spread of the virus - China's GDP contracted 6.8 per cent in the first quarter of this year, the worst on record. The military budget excludes some large items including acquisitions of major weapons systems.
"The annual budget points to fiscal stimulus this year at least on par with that following the global financial crisis", Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note. Officials are holding news conferences by video instead of meeting reporters face to face.
Also this year, legislators are due to take up long-stalled efforts to impose a national security law on Hong Kong.
China has stepped up involvement in Hong Kong, especially since President Xi Jinping came to power in 2012, sparking fears that Beijing is set to undermine its freedoms and human rights.
The speech before 3,000 delegates to the National People's Congress (NPC) begins shortly after 9:00 am (0100 GMT) in Beijing's cavernous Great Hall of the People, and is closely watched for new policy developments. But Beijing has pushed for measures in Hong Kong such as punishment for showing disrespect for the Chinese flag and increasing patriotic-themed education in schools.
This story was first published on CNN.com, "China will not set an economic growth target amid "great uncertainty"." Pressure on employment has "risen significantly", he said.
Li said China remained committed to opening its doors to the outside world in a complex worldwide environment and would continue to work with the United States to implement the first phase of the economic and trade agreement between the two countries. Forecasters say China is likely to face a wave of politically volatile job losses later in the year due to weak United States and European demand for Chinese exports.