The Serie A outfit are known to be long-standing admirers of Manchester City striker Balotelli and have admitted in the past that they would be prepared to offer him a route back to Italy should he wish to head home.
It has been reported that an exchange agreement involving El Shaarawy could help Milan to push through a transfer in January.
El Shaarawy's stock has risen considerably this season, with the talented 20-year-old drawing admiring glances from across Europe.
Milan are aware that they have a potential global superstar on their hands and vice-president Adriano Galliani has sought to bring an end to the speculation claiming that El Shaarawy will be allowed to leave in the New Year, with additions, not sales, the top priority at the San Siro.
He said: "There will not be any exchange.
"El Shaarawy will remain at Milan. We plan to keep our best players and to try and find cover for Nigel de Jong (who will miss the remainder of the season with an Achilles injury)."
Galliani has also made it clear that Milan have no plans to move for Roma midfielder Daniele De Rossi, with the Italy international having also been strongly linked with a switch to Manchester City.
He added: "De Rossi? It's impossible."
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