Russia and China Jointly Fund Program of Investment in Eastern Russia, Central Asia and Western China

The $4 billion Russia-China Investment Fund (RCIF), jointly backed by the Russia Direct Investment Fund (RDIF) and the China Investment Corporation (CIC), has signed a cooperation agreement with the China-Eurasia Economic Cooperation Fund in a move that points to deepening collaboration between Russia and China on investment activity in eastern Russia, Central Asia, and western China.  The agreement calls for the joint targeting of investment projects, with a focus on industry, transportation and energy infrastructure.  Such projects would help both Moscow and Beijing bring connectivity to their underdeveloped hinterlands and merge some of the objectives of Russia’s Eurasian Economic Union (EEU) and China’s Belt and Road Initiative (BRI).

Separately, the Russia-China Investment Fund also announced that it would join the Russia Direct Investment Fund’s United Transport Concession Holding, which was established to develop infrastructure projects.  While some analysts have portrayed the BRI and the EEU as part of a soft power competition between Russia and China in Central Asia, these two agreements demonstrate the closeness that exists in actuality between their visions and the level of joint effort they are willing to pursue to implement them.  In this case, shared objectives include regional integration and addressing infrastructure gaps within their own borders.

While the sums involved are not particularly large – most estimates put CIC’s contribution to the Russia-China Investment Fund at around $2 billion – there are many signs of economic integration between the two countries that go beyond these investment agreements.  For instance, trade between the two countries has risen by a third over the past eight months.  Moscow and Beijing have targeted an increase in the current trade volume of $69.5 billion to $80 billion by 2018 and $200 billion by 2020. With such lofty goals on the near horizon, it can be expected that sums contributed to the Russia-China Investment Fund will continue to grow and other joint initiatives announced.