HONG KONG (Yonhap) -- A free trade pact between Korea and China will likely bolster the international use of the yuan as more traders may use the Chinese currency for their transactions, a Chinese researcher said Monday.

"The increasing bilateral trade and economic cooperation will provide a foundation for the development of the financial sector involving the two countries," Dong Yan, a research fellow at the Chinese Academy of Social Sciences, said in a report.

"Korean exporters and importers will be able to reduce their financial costs through transactions in yuan."

Korea and China kicked off bilateral free trade talks last month. The move is aimed at tearing down trade barriers between the two neighboring countries.

With a gross domestic product of $7.3 trillion, China is the world's second-largest economy and Korea's top trading partner. Two-way trade reached $220.6 billion in 2011, far exceeding $100.8 billion for the United States and $103.1 billion for the EU.

The South Korean government expects that a free trade deal with China could help the national economy grow by 0.95-1.25 percent five years after it goes into effect, with numbers going up to 2.28-3.04 percent in 10 years.

The two countries are aiming to strike a deal within two years.