The Russian Direct Investment Fund (RDIF) and China Development Bank (CDB) have agreed to establish a RMB68 billion (US$10 billion) China-Russia RMB Investment Cooperation Fund, as part of China's One Belt One Road initiative to improve connectivity between Eurasian countries.
The agreement regarding the launch of the China-Russia RMB Investment Cooperation Fund was signed earlier this week in Moscow, during Chinese President Xi Jinping's official visit to Russia. RDIF will implement the project via the Russia-China Investment Fund (RCIF), while CDB will implement the project via its wholly owned subsidiary, China Development Bank Capital (CDBC).
The fund is expected to facilitate a simplified framework for direct investments with settlements in national currencies. The investment activities will focus on Russian and Chinese projects, such as One Belt-One Road and Eurasian Economic Union initiatives.
"China-Russia RMB Investment Cooperation Fund is an important co-operation between China and Russia in the equity investment segment, which is acknowledged and supported by Chinese and Russian governments," said Huaibang Hu, the chairman of CDB. "It will promote the comprehensive and long lasting financial and economic partnership between two countries, and facilitate RMB internationalization.”
RCIF also plans to cooperate with China's Hainan province and implement joint projects worth US$500 million, as part of the One Belt One Road initiative and bilateral investment cooperation. These projects will invest in the development of industrial and innovation parks, high-tech healthcare services, tourism and social infrastructure and culture and art initiatives.
Founded in 2011, RDIF is a Russian sovereign fund with US$10 billion under management. In 2012, it established RCIF with China Investment Corp (CIC), with the aim to improve bilateral economic, trade and investment relations between Russia and China.
At the same time, CDB signed an agreement with Russian state development bank VEB to invest RMB6 billion (US$882 million) to cooperate in developing innovative projects including blockchain technologies.
Earlier this week, RCIF participated in a RMB500 million (US$73 million) funding round in Zhaogang.com, a Chinese steel industry e-commerce platform.