China Development Bank signed a framework agreement with Russian Vnesheconombank on Tuesday to participate in Russia's $2 billion innovation projects.

The document was signed by Hu Huaibang and Sergey Gorkov, chairmen of the two respective state-owned banks, in the presence of Russian President Vladimir Putin and Chinese President Xi Jinping, who is paying an official visit to Russia from Monday.

The new agreement enables the two state-owned banks from China and Russia to invest over 6 billion yuan ($850 million).

The agreement provides promotion for high-tech and innovative projects including the National Technological Initiative projects through various financing instruments, in particular, through private equity funds and repurchase of bonds issues.

The parties have both agreed to support innovative export projects.

"Notably, we have been closely cooperating with our Chinese partners in the support for innovation, which is one of the focus areas of Vnesheconombank's strategy," said Gorkov.

"The potential of this market is really limitless," he said. "Today we observe a great interest in projects delivered in Russia with Chinese involvement."

The funds raised may be channeled to finance projects in power generation, transport, industrial and energy infrastructure, and cross-border projects in Siberia and the Russian Far East, according to Gorkov.

Gorkov said Vnesheconombank's Strategy 2021 prioritizes the bank's participation in supporting catching-up industries (high value added manufacturing, non-commodity exports, infrastructure) and, more importantly, accelerated development sectors (quantum technologies, blockchain, neurotechnologies and biotechnologies).

The VEB and CDB initiative is highly appreciated by experts.

"Our survey among more than a thousand of the Skolkovo Innovation Center resident companies has revealed that 80 percent of Russian innovation companies are willing to enter the Chinese market," said Igor Drozdov, chairman of the Board of Skolkovo Foundation, a leading high-tech innovative park in Russia.

"Moreover, some 30 Skolkovo high-technology companies are already operating there. Since Vnesheconombank Innovations foundation will be based in Skolkovo, we expect to achieve a synergy effect when jointly promoting our companies in the Chinese market," he said.

Vnesheconombank plays an active role in fostering the innovative ecosystem in Russia, and cooperation with Chinese partners is expected to help innovative companies enter global markets and boost exports.

In mid-June, Vnesheconombank and Harbin Bank established a group of innovation support funds with a target volume of investments of up to $700 million. The objective is to build a project portfolio and attract private equity investors.

Kirill Varlamov, the Internet Initiatives Development Fund's Director, said by attracting external funding, VEB – as a key development institution - could become a major driver in supporting Russian start-ups at later stages.

"The injection of new resources will help warm up Russian venture capital industry and make it easier for start-ups to attract investment and agreements with new partners abroad - accelerate entrance of Russian technological companies into export markets," Varlamov said.