"This is an acknowledgement at the highest level that there is a crisis," said Craig Hart, expert on Chinese environmental policy and associate professor at China's Renmin University.
"Their approach is going to have to be pro-economy. I think they will pump money into upgrading plants. This could be another green stimulus although it is not being packaged that way."
China has published a series of policies and plans aimed at addressing environmental problems but it has long struggled to bring big polluting industries and growth-obsessed local governments to heel.
Li said efforts would focus first on reducing hazardous particulate matter known as PM 2.5 and PM 10 and would also be aimed at eliminating outdated energy producers and industrial plants, the source of much air pollution.
(Read more: China's unwelcome export to the US: Air pollution)
China will cut outdated steel production capacity by a total of 27 million tons this year, slash cement production by 42 million tons, and also shut down 50,000 small coal-fired furnaces across the country, Li said.
The 27 million tons of steel, equivalent to Italy's production capacity, amounts to less than 2.5 percent of China's total, and industry officials have warned that plants with another 30 million tons of annual output went into construction last year.
The targeted cement closures amount to less than 2 percent of last year's total production.
The battle against pollution will also be waged via reforms in energy pricing to boost non-fossil fuel power. Li promised change in "the way energy is consumed and produced" through the development of nuclear and renewables, the deployment of smart power transmission grids, and the promotion of green and low-carbon technology.
The National Development and Reform Commission (NDRC), the country's economic planner, said in its report that new guidelines would be issued on relocating key industries away from urban centers to help tackle smog.