People cross a street during morning rush hour in front of the skyline of the central business district (CBD) in Beijing, China December 15, 2020. REUTERS/Thomas Peter

BEIJING, Dec 8 (Reuters) - China will keep expanding domestic demand and support the broader economy with more proactive policies in 2026, the Politburo, a top decision-making body of the ruling Communist Party, was cited as saying on Monday by state media Xinhua.

The remarks about a "more proactive fiscal policy" and "appropriately loose monetary policy" point to a high budget deficit, debt issuance and additional rate cuts next year to reach a growth target likely to remain at around 5%, analysts said.

"I expect next year's growth target to be set at around 5% again, as China can achieve that relying on its robust exports. Even if exports face temporary challenges, the government can use fiscal policy to fill the gap," said Dan Wang, China director at Eurasia Group.

The world's second-largest economy is on track to reach this year's growth target of around 5%, but faces headwinds from a prolonged property slump, weak consumer demand, excess factory capacity in some sectors and declines in infrastructure-led investment.

Even though China and the U.S. reached a trade truce, Chinese manufacturers are still ramping up efforts to diversify their export markets, pursuing closer trade ties with Southeast Asia and other emerging markets, and leveraging Chinese firms' global footprint to establish new production hubs for low-tariff access.

Monday's customs data showed China's trade surplus for the 11 months of the year topped $1 trillion for the first time. Outbound shipments to the U.S. dropped 29% in November year-on-year, but exports to the European Union grew an annual 14.8% last month and the fast-growing Southeast Asian economies took in 8.2% more goods over the same period.

China will better coordinate its domestic economic work and international trade battles next year, Xinhua said.

"I think this means the economic policies for next year will be arranged more flexibly than before," said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

"Despite the truce between U.S. and China on trade, China still expects high uncertainty next year. The domestic policies may need to be adjusted depending on the external economic environment."

FOCUS RETURNS TO STRUCTURAL REFORMS

Policymakers are also facing a dilemma over whether to press ahead with tough structural reforms amid external challenges or roll out more stimulus to lift domestic demand.

Hampered by a global slowdown, a protracted property crisis and local governments straining under debt, officials are finding it hard to jump-start activity, putting renewed focus on the need for economic reforms.

Beijing has signalled a shift toward supporting household consumption and rebalancing the economy over the next five years to tackle worsening structural imbalances, but such measures may take time to deliver results.

Although the Xinhua report did not mention "household consumption" directly, it said the country should "adhere to the principle of domestic demand taking the lead and build a strong domestic market."

"We should put people's livelihood first and strive to do more practical things for the people."

Investors and economists are now waiting for the annual Central Economic Work Conference in coming days, which is expected to set key growth targets and policy intentions for next year - part of Beijing's efforts to start the new five-year plan on a solid footing.

The targets will not be formally disclosed until the annual parliamentary session in March.

(Reporting by China economics team; Editing by Tom Hogue, Stephen Coates and Shri Navaratnam)