KUALA LUMPUR, June 4 — Malaysia will handle business contracts with China made by the previous administration carefully, former finance minister Tun Daim Zainuddin said.

In an interview with The Star, Daim admitted that the economic superpower is a "very important” friend to Malaysia.

"China is very important to us,” the Council of Eminent Persons told the English daily.

"We enjoy very close relations, but unfortunately under the previous administration, a lot of China contracts are tainted, difficult to understand and the terms are one-sided,” said Daim.

He said Malaysia is in talks with Beijing at the moment.

"I met with Chinese Ambassa­dor Bai Tian. China might have been misled by our fellows,” he said.

Last week, Prime Minister Tun Dr Mahathir Mohamad announced the cancellation of the Kuala Lumpur-Singapore High Speed Rail (HSR) and renego­tiation of contract on the China-financed East Coast Rail Link.

Beijing has expressed its anger over the Malaysian actions via a report in the Global Times, an official mouthpiece of the Communist Party of China.

Daim said he had expressed a similar stance to Singapore Prime Minister Lee Hsien Loong when they met recently.

"We have to protect our neighbours. The fault is with [the previous government] here,” said the 80-year-old.