In his report to the National People's Congress at Beijing's Great Hall of the People, Wen lowered the country's growth target for 2012 to 7.5 percent, the first such change after seven years at 8 percent.
Wen's announcement was in keeping with the government's goal of making economic progress while maintaining stability.
The annual parliamentary session drew about 3,000 delegates from across the country, Xinhua News Agency reported.
The leadership transition, which happens once every 10 years, will take place at the annual meeting of the Communist Party of China later this year.
Vice President Xi Jingping is expected to be the successor to Hu Jintao as president and general secretary of the Communist Party, while Li Keqiang is expected to take over from Wen.
In his report to Parliament, Wen spoke of his government's achievements last year, which included getting the 12th five-year plan (2011-2015) "off to a good start."
However, he warned: "We are keenly aware that China still faces many difficulties and challenges in economic and social development."
His report said globally, the economic recovery will be tortuous as the financial crisis is still evolving and some countries will find it hard to ease the sovereign debt crisis any time soon, Xinhua reported.
At home, the state-run news agency said it has become more urgent but also more difficult to solve institutional and structural problems, and alleviate the problem of unbalanced, uncoordinated and unsustainable development.
But Wen said China is still in "an important period of strategic opportunities" for development, and there are a number of favorable conditions to maintain steady and robust economic development for a long time.
Wen also said the government will try to keep inflation near 4 percent this year, create 9 million new jobs, and keep urban jobless rate at 4.6 percent or lower.
On Sunday, China announced plans to raise its defense budget by 11.2 percent to $106.4 billion in 2012.
Li Zhaoxing, former foreign minister and currently the spokesman for the parliament session, said based on the government's principle of coordinating defense development with economic development, the latest growth in defense expenditure is "reasonable and appropriate."
He said China's military spending mainly comprises the living expenditures of those in the military, expenses for training and maintenance, and spending on equipment.
IHS Jane, a European think tank, had earlier been quoted as saying China's military expenditures would increase from $119.8 billion in 2011 to 238.2 billion U.S. dollars in 2015.