China’s 11 free trade zones (FTZ) will likely become the hub for arranging and booking of the billions of dollars of project financing as China accelerates its one-belt-one-road (OBOR) program.

In a forum held in Xiamen last weekend, the National Development and Reform Commission (NDRC) affirmed that each province and each FTZ are authorized to be the lead arranger in OBOR projects, while, other entities are allowed as joint coordinators.

“We also strongly suggest that cities specifically designated in the state plan, such as Xiamen, act as arrangers for investments in one-belt-one-road projects,” says Cao Wenlian, director at the International Cooperation Center of NDRC.

In May 2015, NDRC issued a three-year plan designed to enhance capacity by designating the “whole world” as part of the OBOR initiative. More than 20 countries have now signed bilateral capacity agreements with China.

Both Chinese state owned enterprises (SOEs) and privately-owned enterprises (POEs) are able to participate in this initiative. An economic development zone is now under construction in Malacca state in Malaysia arranged by Guangdong province. Malaysia is also building an economic development zone in China. Companies within the two zones can enjoy the same tax benefits as well as regulatory conveniences.

Foreign financial institutions such as Standard Chartered, HSBC, and Citi have already set up branches in Chinese FTZs, providing integrated services such as cash pooling and cross-border netting to Chinese corporates wishing to “go global”(走0出去). J.P. Morgan also recently established its presence in the Shanghai free trade zone. It set up the first wholly foreign-owned asset management company within the zone.

“Our free trade zones can learn from the successful experience of bilateral capacity agreement. A good example will be Beijing’s Zhongguancun Science Park, which invested in an industrial zone in Xuzhou. So I expect our free trade zones to invest both domestically and overseas, building some economic development zones, for example, to boost the economy in the two markets,” says Cao.

The bilateral capacity agreement was first introduced by Premier Li Keqiang in his visit in Thailand, where he put forward a new concept called “high speed railway in exchange of rice”, suggesting a new approach to deal with the over-capacity in different countries. In 2015, Li visited France and signed the first bilateral agreement in one-belt-one-road project with France.