CHINA may face new inflationary pressure if it relaxes monetary policies too soon and hastily, a government researcher said, suggesting that a better way may be adjustments in fiscal policy.

"China has fine-tuned macroeconomic policies a bit, responding to a moderating economy," said Fan Jianping, a researcher with the State Information Center, a unit under the National Development and Reform Commission, China's top economic planning agency.

"But it should seek a better balance between growth and inflation. Using monetary measures, although efficient, has huge side-effects and may create new inflationary pressure," Fan was cited by the China Securities Journal yesterday.

He forecast China's economic growth may slow to around 8.8 percent from a year earlier in the fourth quarter, down from 9.1 percent in the third quarter, 9.5 percent in the second quarter and 9.7 percent in the first three months.

He suggested that corporate taxes be cut and introducing more anti-monopoly measures to bolster the market in order to spur sustainable growth. In fact a trial program to lower corporate taxes in selected service industries in Shanghai will start next year, the Ministry of Finance and the State Administration of Taxation said last month.

The Consumer Price Index, the main gauge of inflation, weakened for a second month in September. It rose 6.1 percent from a year earlier, down from August's 6.2 percent and a 37-month high of 6.5 percent in July.

Fan said he expects October's inflation to be around 5.5 percent.

The National Bureau of Statistics is set to release October's key economic data tomorrow.

Premier Wen Jiabao said last month that China should fine-tune macroeconomic policies and maintain a reasonable expansion in credit.