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BELGRADE, May 16 (Reuters) - Serbia borrowed $297.6 million from China to overhaul and modernise a key railway line that will eventually link the capital Belgrade to Budapest in Hungary, the Tanjug news agency reported on Tuesday.
Beijing sees Serbia as part of its One Belt, One Road initiative, which is intended to open new foreign trade links for Chinese firms.
China has already invested over $1 billion in the Balkan country - a European Union membership candidate - mostly in soft loans, infrastructure and energy projects.
Under the terms of the deal agreed last year and finalised in Beijing on Tuesday, Serbia will use loan from China's Exim Bank to finance a 30km-long (18.6 miles) stretch of the railway line from Belgrade to the northern town of Stara Pazova, which will form a part of the future link with Budapest.
The existing railway lines between Serbia and neighbouring Hungary are obsolete and in a poor state of repair.
"All financial matters are solved, work will begin in a couple of months," Aleksandar Vucic, Serbia's Prime Minister and President-elect, was quoted as saying by Tanjug.
The Serbian delegation led by Vucic met top Chinese officials, including President Xi Jinping and Premier Li Keqiang, and tentatively agreed investments in infrastructure, transportation, agriculture and trade, the report said.
To save on subsidies to state firms, Serbia already sold its only steel mill, Zelezara Smederevo, to China's Hesteel .
Belgrade is also seeking a Chinese partner to sell RTB Bor, its sole copper mine and foundry. (Reporting by Aleksandar Vasovic, editing by Pritha Sarkar)