New fund will cover Russian-Chinese Belt & Road Projects
Russia and China have agreed to launch a Chinese Yuan dominated fund under the existing "Russia Direct Investment Fund" (RDIF) to cater for jointly financed projects in Siberia, the Russian Far East and North-East China. The RDIF Chinese Yuan denominated fund has been jointly invested in by the private equity Russia-China Investment Fund (RCIF) together with Chinese investment bankers Suiyong Capital and the Dazheng Investment Group.
RDIF CEO Kirill Dmitriev stated, "The Fund will engage in the implementation of strategically important investment projects, focused on the Central Federal District, the Far East of Russia and the north-eastern part of China. The Fund will actively promote the strengthening of economic ties at an inter-regional level, through the use of national currencies in all settlements. The China-Russia Regional RMB Fund virtually is the first active RMB [yuan] fund focusing on Russia and China. It is one of the most important examples of regional cooperation between the two countries."
The RCIF Chairman and Joint RDIF CEO, Bing Hu stated, "The China-Russia Regional RMB Fund is a landmark example of the productive development of the bilateral regional cooperation. It is especially important that the fund is formed in RMB, which will reduce foreign exchange risk between RMB and RUB via other currencies. We are pleased that RCIF participated in the initiation of this Fund and we welcome new partners as the two countries continue to develop their regional cooperation."
Representatives told the media that the fund will initially hold 1 billion yuan ($150 million), but that Chinese investments will likely increase the fund up to its 6 to 7 billion yuan target capital. A statement issued by RDIF said, "The parties have identified priority areas of cooperation, and are now studying a number of specific investment opportunities in natural resources, financial services, industrial manufacturing and healthcare sectors. The parties also focus on the support of Russia's state strategy for technology development and investments."
China has its own development issues in its North-East region, and especially in Heilongjiang Province, which has no direct access to seaports. China and Russia have been developing the Primorye 1 Corridor, which will open up Heilongjiang through to the Pacific via Russia's Vladivostok Port. Russia, for its part, has also recently been talking to North Korea over a second connecting bridge across the Tumen River, while the first rail bridge between Russia and China over the Amur (Heilongjiang) River has just been completed and should be operational in a few months.
The new China-Russia Regional RMB Fund will help drill down into the precise regional needs of the area and continue the development of this much-neglected but potentially vital part of East Asia. China-Russia bilateral trade is currently about US$100 billion and has the growth potential to double that in the next five years. North-East Asia may previously have been regarded as a backwater, but this is rapidly changing, and opportunities are emerging fast in this under-valued region.
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