Bilateral economic relations between South Korea and China are expected to further strengthen as the two countries will aim to solidify and bolster their ties to boost trade when President Park Geun-hye and President Xi Jinping meet for a summit in Seoul on Thursday.

The two sides will engage in talks on a number of economic agenda both countries want to rapidly resolve and implement, according to local industry sources.

Korea and China are expected recommit to narrowing their differences over tariff reductions of strategic goods via a free trade deal, which they have been negotiating since 2012.

Analysts said that the two countries may seek to conclude the bilateral trade talks that also cover cross-border high-tech investments, services and sensitive areas such as agriculture by the end of this year.

The two sides have locked horns over key trade items, with Asia’s fourth-largest economy demanding that China open markets to Korea’s petrochemical and machinery industries, while the world’s second-largest economy urged Korea to lower the barriers to its agriculture market.

“Although talks have been pushed back numerous times as they constantly failed to reach a consensus, they cannot miss this opportunity that would allow Korea and China to see a further increase in trade and employment,” said an industry source.

Korea is China’s fourth-largest trading partner after the U.S., Hong Kong and Japan, while exports to China account for more than a quarter of Korea’s total outbound shipments annually.

When they forge a free trade deal, Korea is expected to see its annual trade with China increase by $3.5 billion, as well as see its gross domestic product growth climb, according to Korea’s Finance Ministry.

The potential trade deal would also likely pave the way for the two partners, whose trade increased 40-fold to $230 billion last year since they established diplomatic ties in 1992, to boost direct currency exchanges for trade settlement as China seeks to internationalize the renminbi.

China has been aiming to make the yuan a key global currency to reduce its reliance on the dollar by securing deals allowing its economic partners, mostly in Asia, to settle their trade in Chinese money.

During the Chinese president’s two-day state visit, the country will be holding its biggest Korea-China business forum where a number of deals will be made that will lead companies from both countries to increase cross-border investments.

Executives of Korea’s leading conglomerates such as Hyundai Motor, LG and Samsung will be attending the conference.

By Park Hyong-ki (hkp@heraldcorp.com)