An agreement to be signed by Xi Jinping and Vladimir Putin in Moscow on Friday will see state-owned China Construction Bank and the government-backed Russian Direct Investment Fund (RDIF) establish a mechanism to allow Chinese financing to flow to Russian firms, The Financial Times reported, citing RDIF chief executive Kirill Dmitriev. The RDIF and another investment fund jointly launched by the countries in 2012 will lower risk for Chinese lenders by extending subordinated debt to or taking equity positions in prospective borrowers, meaning the Russian funds would suffer first if the loans go bad, possibly sparing their Chinese counterparts.
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