Beijing and Seoul on Monday pledged to push forward free trade negotiations to upgrade cooperation, as President Xi Jinping met with Republic of Korea President Park Geun-hye on the sidelines of the APEC summit.
"Establishing a free trade area between China and the ROK is the most important issue in current Beijing-Seoul economic ties," Xi said.
"China hopes that both countries can actively advance the negotiation process and reach a high-level Free Trade Agreement that guarantees the general balance of mutual interest as soon as possible."
Currently, China is ROK's largest trading partner, largest market for exports and largest source of imports and investment, while the ROK is China's third-largest trading partner.
Bilateral trade volume surpassed $250 billion (S$312 billion) in 2012, compared with only about $6 billion in 1992, when China and the ROK established diplomatic ties.
According to statistics from the Foreign Ministry, trade between the two countries increased 8.4 per cent in the first half of 2013, while Chinese investment in the ROK grew 11.3 per cent.
The ROK enjoyed a trade surplus for a long time. The FTA would further boost the economic development of both countries, although there are still difficulties to reach the agreement, said Wang Junsheng, a researcher on Korean studies with the Chinese Academy of Social Sciences.
"The ROK's main concern is that the FTA will have an impact on its domestic agriculture industry, while Beijing's worry focuses on the manufacturing industry," Wang said.
The price of ROK agricultural products is very high at present. Cheap Chinese agricultural products may arouse sharp competition against domestic ones when they enter the ROK market under a free trade agreement.
A similar impact may also happen to China's manufacturing industry, especially in electronic components.