TIANJIN, China (Reuters) - China plans to cut its steel production capacity this year by 45 million tonnes and lower coal output capacity by 280 million tonnes, the head of the country's top economic planner said on Sunday.

The capacity cuts will involve relocating 700,000 workers in the coal sector, and 180,000 workers in the steel industry, Xu Shaoshi, chairman of the National Development and Reform Commission, said at the World Economic Forum in the northern city of Tianjin. Xu said he was very confident that China will achieve the 2016 targets.

"The most urgent task is reducing excess capacity," Xu said.

"I'm very confident that we can achieve the targets."

China has vowed to tackle price-sapping supply gluts in major industrial sectors, and said in February that it would close 100 million-150 million tonnes of steel capacity and 500 million tonnes of coal production within three to five years.

China plans to allocate a total of 100 billion yuan to help local authorities and state-owned firms finance layoffs in the two sectors this year and in 2017, with 20 percent of the total used to reward high achievers.

Layoffs from the two sectors are expected to total 1.8 million people, according to official estimates.

Xu said China's overall leverage levels are under control and the government may roll out policy steps to "actively and steadily" reduce corporate debt levels, which is the main problem, in the near term.

China's total debt load rose to 250 percent of gross domestic product (GDP) last year, and the IMF recently warned that the high corporate debt ratio of 145 percent of GDP could lead to slower economic growth if not addressed.

The government will forge ahead with supply-side reforms while appropriately expanding aggregate demand to ensure economic growth to be within a reasonable range, Xu said.

He reiterated the government's target of achieving annual average growth of at least 6.5 percent between 2006 and 2020.

(Reporting by Kevin Yao; Editing by Catherine Evans and Sam Holmes)