Malaysia and China plan a feasibility study on forging an economic partnership agreement, Chinese officials said, flagging a move seen as a precursor to free trade talks.

Chinese Premier Wen Jiabao and Malaysian Prime Minister Abdullah Ahmad Badawi agreed on the study in a meeting on Monday on the sidelines of a summit between China and Association of Southeast Asian Nations (Asean) here.

"We have come to realise that our bilateral cooperation with China has certainly improved, has done much better than before," Abdullah told reporters.

"I believe that this cooperation will continue to expand and on the basis of that, we believe that we should be identifying certain areas... which it would be an advantage to both China and Malaysia," he said.

Abdullah said areas for cooperation could include research on alternative fuels and biotechnology, which both parties are "equally interested in", but that officials would also be exploring other sectors.

"These areas will be strategic areas and (they) will contribute benefits to both sides if we are willing to cooperate," he said.

Four measures

Chinese foreign ministry spokesman Qin Gang said Wen suggested four measures to deepen links between the countries, including increasing energy cooperation and forging closer economic ties.

Wen suggested the countries "launch as soon as possible a feasibility study on a future closer economic partnership agreement in order to push forward economic and trade cooperation between the two countries," Qin told reporters late Monday.

"Prime Minister Badawi endorsed all four suggestions," he added.

Forging a bilateral economic partnership agreement can be a first step towards freeing up trade.

China has started talks on a free trade pact with Asean member Singapore and is working towards the creation of the China-Asean Free Trade Area.