KUALA LUMPUR, Feb 21 — Finance Minister Lim Guan Eng said today negotiations with China on the East Coast Rail Link were encouraging, amid news reports that Putrajaya is close to an agreement.

“It’s positive,” Lim told reporters after opening a property summit here.

On Tuesday, Bloomberg quoted Foreign Minister Datuk Saifuddin Abdullah as saying Malaysia has made progress in talks with China on the rail project that Prime Minister Tun Dr Mahathir Mohamad’s government previously sought to cancel.

China is willing to reduce the US$20 billion (RM81.4 billion) price tag for the ECRL and talks are “in the last mile,” Saifuddin said in an interview at his office near Kuala Lumpur.

But Lim was cautious about the matter, only saying negotiations are ongoing and that Putrajaya is firm about keeping the cost “affordable”.

“Still have to wait for discussions and negotiations... but it has always been about bringing the cost down,” he said.

“We have to think about the future. If we cannot pay, that will put the future of our children at risk.”

During his visit to Beijing, China last year, Dr Mahathir suggested that the project was cancelled but later clarified that it was deferred instead.

Dr Mahathir explained the exorbitant compensation forced his government to reconsider. But there was also concern that cancelling the project could hurt ties with Beijing.

China was among Malaysia's biggest trading partner, accounting for nearly 30 per cent of total exports last year.