The two sides had concluded "substantive negotiations" on a free trade deal, China's state-run Xinhua news agency reported Monday.

Both sides said the accord was designed to remove or at least sharply reduce trade barriers in a number of fields, following two years of tough talks.

"South Korean and Chinese leaders today declared an effective conclusion of the FTA at a summit held at the Great Hall of the People in Beijing," a statement from South Korea's presidential office said, adding that some details had yet to be worked out before a formal signing of the final text next year.

Thorny rice issue dodged

Media reports stated the agreement would cover a wide range of products, services, investment, finance and communications, but would exclude rice, a key commodity and staple in both nations.

Watch video 01:09 South Korea's car market

Monday's announcement came as South Korea had yet to decide whether to join a US-initiated Trans-Atlantic Partnership pact, aimed at slashing trade obstacles among a dozen countries.

China and South Korea normalized diplomatic relations in 1992. Since then, bilateral trade has grown 36-fold to $228.9 billion (183.4 billion euros) in 2013.

hg/sgb (Reuters, dpa)