Serbia and China signed on Wednesday a $716 million- (529.5 million euros) deal to build a new coal-fired power plant unit and expand coal mining, officials said.

The deal signed with China Machinery Engineering Corporation (CMEC) foresees a construction of a new unit at Serbia's largest power plant, Kostolac, to be finished by 2019, Energy Minister Zorana Mihajlovic said.

The construction is expected to start in early 2014, she added.

Also, the project includes expansion of a lignite mine near the plant, which expected to increase its output from 9 to 12 million tonnes of coal per year.

Funding of the project will be secured a loan from China's Exim Bank to the Serbian government that will cover 85 percent of the necessary finances, in accordance with framework accord between Belgrade and Beijing agreed in 2010.

The 15-year loan has a five-year grace period, with a fixed 3.0 percent interest rate.

It should be approved by the Serbian parliament in December, during a debate over the 2014 draft budget, Mihajlovic said.

Serbia needs to upgrade its energy infrastructure, damaged and mismanaged during the Balkan wars of the 1990s, to meet growing demand and reduce its reliance on importing energy.

Also Wednesday, Transport Minister Aleksandar Antic said Serbia has managed to secure $1 billion from China's credit fund set up for mostly infrastructure products in Central and Eastern Europe.

"Beside the loan for construction of the power plant, the money will also be invested in building of a highway" linking Belgrade and the western town of Cacak, Antic told reporters.

Following a pattern already successfully applied in Asia and Africa, China is seeking to expand its influence in the southeastern Europe by cooperating on major infrastructure and energy projects.

EU hopeful Serbia wants to become China's gateway to the Balkans and onwards to Europe.

In 2010, the construction of the new bridge over the Danube in Belgrade worth 170 million euros was China's first large infrastructure project announced on the European continent.