The line will connect Ningbo, a port city south of Shanghai, to Zhoushan, an archipelago off the east coast, CNN reported.
The proposed underwater tunnel will be a part of the 77-km Yong-Zhou Railway plan to boost tourism and create a two-hour-commute zone within Zhejiang province.
First mentioned in a government transportation plan in 2005, the feasibility study of the Yong-Zhou Railway plan was approved by Beijing in November.
Within the 77 km railway route, some 70.92 km of tracks will be newly built, including a 16.2 km undersea section.
The new route will transport travellers from Hangzhou — capital city of Zhejiang — to Zhoushan in 80 minutes.
The current journey takes about 4.5 hours by bus or a 2.5-hour drive by personal vehicle.
Seven stations are planned for the entire route, including four new stations and three redeveloped ones.
At a whopping 25.2 billion yuan ($3 billion), the project is expected to begin next year and is due for completion in 2025.