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Chinese President Xi Jinping (L) reviews the guard of honour with his Serbian counterpart Tomislav Nikolic during a welcoming ceremony in Belgrade, Serbia June 18, 2016. REUTERS/Marko Djurica

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By Ivana Sekularac

SMEDEREVO, Serbia (Reuters) - Serbia could play a significant role in Beijing's ambitious plan for a new "Silk Road" to boost trade with Europe, Asia and Africa, Chinese President Xi Jinping said on Sunday.

Xi said China was ready for more cooperation with Belgrade during a visit to Serbia that has seen his country strengthen its economic presence in the Balkans with more than 20 finance and infrastructure deals.

China's One Belt, One Road initiative, intended to open new trade links for Chinese firms as the domestic economy slows, envisages a new Silk Road from Western China to Central Asia and on to Europe via the Balkans, a region keen to attract Chinese investment.

Addressing workers and officials at a steel-works bought by a Chinese company, Xi said: "We are developing the One Belt, One Road project ... with its position and advantages Serbia will have a significant place in this."

He added: "This cooperation should be an example of Chinese cooperation with countries in Southern and Eastern Europe."

China's Hesteel <000709.SZ> signed a 46-million euro deal in April to buy the Smederevo steel-works, a 100-year-old company that was part of U.S. Steel during the early years of this century before being handed over the Serbian government.

Hesteel chairman Yong Yu said his company would make the plant one of the most competitive in Europe.

European Union steel producers have complained that the purchase of a steel-works in an EU candidate country by a state-owned Chinese enterprise raises serious concerns about unfair competition from state-backed enterprises.

Prime Minister Aleksandar Vucic said Serbia was in talks with the Chinese on setting up a free trade zone at Smederevo, a city on the banks of the Danube a short distance from Belgrade.

Vucic also invited Chinese companies to invest in Serbia's troubled copper and petrochemical industries.

Since China and Serbia signed a strategic partnership agreement in 2009, China has invested more than $1 billion in Serbia, mostly in soft loans for infrastructure and energy projects.

After Serbia, Xi travels to Poland. He will also visit Uzbekistan for a summit of the Shanghai Cooperation Organisation, a Chinese and Russian-led security grouping.

(Additional reporting by Aleksandar Vasovic; Writing by Giles Elgood; Editing by Alexander Smith)

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