Machine gun fire and stun grenade blasts shook the plant in Smederevo as police from the two countries used three helicopters and 20 armoured vehicles in a staged raid to rescue hostages.

Serbia's interior minister Nebojsa Stefanovic said he planned more cooperation with Chinese law enforcement agencies, saying Serbia was "learning from a bigger and stronger" country.

Some 180 special police officers from China's Henan province participated in the exercise at the mill, which was bought by China's Hesteel in 2016 and employs a number of Chinese citizens.

China passed a law in 2015 allowing its forces to venture overseas on counter-terrorism operations, and has been seeking to extend its capacity to carry out remote missions in case it ever needs to rescue Chinese citizens.

Keen to boost ties with European nations, China deployed military medics to practice with colleagues from Germany for the first time in July.

Serbia's military and police forces hold regular drills with Russia and NATO member countries as the government tries to balance its goals of joining the European Union and maintaining ties with traditional allies.

China has extended loans worth billions of dollars to build railways, roads and power plants in Serbia, mainly using Chinese workers, as part of its Belt and Road project to open up trade routes for Chinese companies.

Chinese police officers were deployed in Serbia earlier this year to help their Serbian colleagues cope with a growing number of Chinese tourists and workers.

Electronics giant Huawei also plans to open a development centre in Serbia and has begun a project with the government to develop facial-recognition software that would see hundreds of surveillance cameras mounted in Belgrade.

Australian Associated Press