Malaysia Telecom said it will cancel a $ 20 billion project to build a railway line with China Communications Construction Co.
Ali said the project cost was too high when Malaysia welcomed all forms of investment from China on a case by case basis.
"The ministerial meeting made this decision because the cost of extending this route is very expensive and there is no financial capacity."
"The government has not yet decided how much to pay Chinese companies for termination of the project," he said.
He adds up to $ 120 million in annual profits to the project.
"We can not afford it, so we have to finish this project without affecting our friendship with China," he said.
Malaysian Prime Minister Mahathir Mohamad said in August that "the railway project will be canceled immediately, but the government is in talks with a Chinese company on the future of the railway company."
Another project supported by China, the Sabah natural gas pipeline, was announced in August.
Chinese companies did not respond to Reuters' request for phone comments and text messages.