South Korea says aims for final trade deal with China in H1

SEOUL (Reuters) - South Korea said on Wednesday it and China had completed the "initialising" process on a bilateral free trade agreement and were aiming for formal signing of the pact within the first half of this year.

The initialising process marks a step closer to the final signing of the deal and comes after leaders of the two neighbouring trade giants declared in November last year "substantial conclusion" in negotiations.

The deal would sharply reduce barriers to commerce and investment between the two trading giants, but leaves in place those on sensitive items such as rice and automobiles. China is the world's largest exporter and South Korea ranks seventh.

The deal comes as South Korea has yet to decide whether to join the United States-initiated Trans-Pacific Partnership pact, aimed at slashing trade barriers between a dozen countries.

(Reporting by Choonsik Yoo; Editing by Jacqueline Wong)