The government is planning to spend 260 billion yuan (HK$326 billion) to build the world's longest undersea tunnel across the Bohai Strait.
The proposed 123-kilometre railway project would carry passengers and vehicles between the port cities of Dalian in Liaoning's and Yantai in Shandong , according to Time Weekly, a Guangdong-based newspaper.
The report said the tunnel, of which 90 kilometres would be under water, would surpass the world's two longest channel tunnels - Japan's Seikan Tunnel and the Channel Tunnel that connects Britain and France.
"It is a key national project that won the full support of Premier Li Keqiang when he was Liaoning's party chief in 2004," said Professor Wang Mengshu , a tunnel and railways expert from the Chinese Academy of Engineering.
Wang said the Bohai Sea tunnel was a critical part of the country's 5,700-kilometre railway project to link the cities of Tongshan in the northeast and Sanya in Hainan .
While the State Council must first review the massive proposal, Wang said work could start as early as 2016 and would take about six years to complete. The China Railway Engineering Corporation would manage the tunnel after it opens.
For security reasons, the structure and design would mirror the 54-kilometre Seikan Tunnel, which is now the world's longest and deepest operational rail tunnel, Wang said.
Passenger vehicles would be loaded onto rail carriages and transported at up to 250km/h, shortening driving time between Dalian and Yantai to an estimated 40 minutes. Time Weekly said ferries between the two cities, which are about 170 kilometres apart, require eight hours to make a single trip.
The tunnel proposal includes 12 comprehensive studies compiled by more than 100 experts over more than two decades. It could be submitted to the State Council with an endorsement from the academy as soon as next month, Wang said.
Time Weekly said the Liaoning and Shandong governments were asked to provide 100 billion yuan each, while the other 60 billion yuan would be covered by railway corporation.
The investment of 260 billion yuan was projected to break even within 12 years. Daily traffic flow between Dalian and Yantai was expected to increase to more than 100,000 vehicles by 2015.