RUSSIA – CHINA Chinese interested in the Kremlin’s new sovereign fund

Russia "has big development potential given its vast market and rich resources," said Lou Jiwei, head of China’s US$ 300 billion sovereign wealth fund. "CIC is willing to invest in Russia," he said.

The CIC would look at creating a Russian portfolio that included stocks, securities and investments in raw materials, infrastructure and real estate, Lou said.

Russia's sovereign fund, planned for June, and a new round of privatisation are the channels for possible investment in the country.

The Kremlin plans to attract US$ 60 to 90 billion in foreign investments in the fund President Dmitri Medvedev plans to launch in June, probably at the Saint Petersburg Forum.

Vladimir Dmitriev, head of Vnesheconombank, the financial institution charged with the project, said that the goal should be achieved in five years.

In April, the Russian central bank announced that the outflow of capital in the first quarter of 2011 reached US$ 21.3 billion.

“Investors were simply scared off,” Dmitriev said as he explained why the government decided to act. “They [investors] are willing to come only on the condition that the government shares the risks.” (N.A.)