China, Russia plan $10.5b in OBOR investments

The program entails the creation of the RMB68 billion ($10 billion) China-Russia RMB Investment Cooperation Fund (CRRICF) and a commitment to deploy $500 million from the existing Russia-China Investment Fund (RCIF). CRRICF will be supported by Russian Direct Investment Fund (RDIF) and China Development Bank (CDB).

According to a statement, CRRICF is expected to facilitate the establishment of a simplified framework for direct investments with settlements in national currencies. RDIF will implement the mandate alongside CDB via RCIF, which it jointly created with sovereign wealth fund China Investment Corporation (CIC).

RCIF also confirmed in a separate disclosure that it has earmarked more than $500 million for technology and social infrastructure projects in Russia and China’s southeastern Hainan province, the latter being an important destination for Russians tourists. The signing ceremony was held as part of Chinese President Xi Jinping’s state visit to Russia.

“Hainan province stands as a significant portal of the Maritime Silk Road, which is part of the Belt and Road initiative; and RCIF is committed to enhance bilateral investment and trade between China and Russia,” said Bing Hu, co-CEO and president of RCIF. He added that RCIF sees great investment potential in areas such as tourism, cultural communication, medical services and new technology innovation.

OBOR encompasses a number of social and industrial infrastructure development agreements aimed at improving links between China and potential trade partners across Eurasia. The Chinese government has estimated it will require some $5 trillion of financing across the next five years.

Russia is said to have received more OBOR-related investment than any other jurisdiction so far at around $70 billion. Last month, the country’s state development bank Vnesheconombank agreed to establish a $200 million cross-border IT fund with India’s Srei Infrastructure Finance.

RCIF was set up in 2012 with $2 billion in commitments from RDIF and CIC in equal share and an additional $2 billion expected to be raised from international institutional investors. The fund allocates 70% of its capital to Russia and former Soviet countries, with the remaining 30% invested in China. 

To date, the fund claims to have made 19 transactions worth $1 billion in wood processing and transport infrastructure as well as the financial services, technology, and consumer sectors.

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• Topics
• Greater China
• Central Asia
• Fundraising
• Growth
• Renminbi fund
• China
• Russia
• Infrastructure
• China Development Bank
• One Belt One Road