Moscow is trying to attract more Chinese loans for Russian companies by shouldering some of the credit risk through a new financing arrangement that seeks to ease Beijing’s wariness of ramping up exposure to cash-starved Russian businesses.

Under an agreement to be signed at a summit of President Xi Jinping and President Vladimir Putin in Moscow today, the state-backed Russian Direct Investment Fund and state-owned China Construction Bank will set up a debt mechanism to unlock Chinese financing for Russian borrowers.

RDIF and the $2bn Russia-China Investment Fund, which RDIF launched with the China Investment Corporation in 2012, plan to lower the risk for Chinese lenders by either taking equity positions in prospective borrowers or extending subordinated debt to them.