On July 4, the Russian Direct Investment Fund (RDIF) and the China Development Bank jointly announced the formation of the Russia-China RMB Cooperation Fund. RDIF chief Kirill Dmitriev claimed the fund will “Increase the volume of cross-border direct investment and significantly increase the number of jointly implemented projects,” while CDB Chairman Hu Huaibang called the development “a major stage in the China-Russia investment partnership.” Also on the sidelines of President Xi Jinping’s visit to Moscow, CDB launched a $6 billion innovation fund with Russia’s VEB Bank.
The fund has two main aims: firstly, the settlement of cross-border trade in local currencies, thus minimizing exposure to the U.S. dollar. Secondly, the fund will reportedly help finance infrastructure projects that tie in to both China’s “One Belt, One Road” scheme and the Russian-led Eurasian Economic Union. While not on the same scale as the $124 billion Silk Road Fund, the project represents the latest step in a growing trend of regional infrastructure financing initiatives being led by China. (Another example is the China-Central/Eastern Europe Fund, an $11 billion scheme established in November 2016.)
The new agreement also represents another example of Russia-China cooperation in the economic and financial domain.