China Investment Corporation (CIC), China's sovereign-wealth fund, agreed to invest $1 billion in a Kremlin-backed fund, the Wall Street Journal reported.

The Russian Direct Investment Fund (RDIF), a new fund worth 10 billion U.S. dollars, was established in June by the Russian government. The private-equity vehicle is aimed at promoting foreign investment in Russia.

The RDIF will put the $1 billion investment from CIC into a new offshoot fund called the Russia-China Investment Fund, co-run by RDIF and CIC. The new fund aims to raise an additional $1 billion to be invested in Russia and China.

The RDIF will also aim to ameliorate issues such as tax concerns for long-term investors, RDIF Chief Executive Officer Kirill Dmitriev said in a recent interview with Xinhua.

CIC was established in 2007 with the issuance of special bonds worth RMB 1.55 trillion by China's Finance Ministry. These were used to acquire approximately 200 billion U.S. dollars of China's foreign exchange reserves and formed the foundation of the country’s registered capital.

China's business press carried the story above on Wednesday.