China should refrain from boosting credit and fiscal spending again as stimulus measures to avoid fueling inflation and pushing up government debt, a former deputy central bank governor said in remarks published Monday.

Currently, China's economy faces inflationary pressures as well as pressures on government debt, which means we cannot go down the road of expanding both credit and fiscal spending, the official Finance News quoted Wu Xiaoling as telling a forum.

Chinese policymakers should be extremely wary about the risk of government debt, said Wu, who is now a senior lawmaker.

China is trying to clean up the roughly 10.7 trillion yuan ($1.68 trillion) in local debt -- a hangover from a 4 trillion yuan economic stimulus package unveiled by Beijing in late 2008 to counter the global financial crisis.

China faces more economic challenges in the fourth quarter of this year and 2012, Wu said, adding that slower economic growth next year would be highly likely.

Weak global demand, government tightening steps to target the property sector and a slowdown in investment for highways and high-speed railways as could weigh on China's growth, she added.

Wu did not give specifics.

Analysts believe China economic growth in the third quarter will slow from the 9.5 percent pace in the second quarter due to credit curbs at home and weak demand abroad.

Annual inflation eased to 6.2 percent in August from a three-year high, while economic activity eased, underlining expectations that the central bank may hold off on further policy tightening amid worries about a global slowdown.

The central bank has raised interest rates five times since last October, and increased banks' required reserves nine times.

Wu said the government should not rush to loosen monetary policy as 3-5 percent inflation could be a normal phenomena in the next several years.

Meanwhile, Chinese regulators should give small companies more opportunities to issue shares and expand the channels for bigger companies to tap the bond market, she added.

(Reporting by Kevin Yao; Editing by Ken Wills)