China's Foreign Minister, Wang Yi, visited Kathmandu in December and said the line could eventually be extended to that city and beyond.
Chinese tourism to Nepal, which is home to eight of the world's 14 peaks higher than 8000m is also growing.
Wang Mengshu, of the Chinese Academy of Engineering, told state media: "If the proposal becomes reality, bilateral trade, especially in agricultural products, will get a strong boost, along with tourism."
He added: "The line will probably have to go through Qomolangma [the Tibetan name for Everest], so workers may have to dig some very long tunnels."
The challenging Himalayan terrain, with its "remarkable" ups and downs, means that trains on any line to Kathmandu would probably have a maximum speed of 120km/h, he said.
Sino-Indian tensions remain high, with both countries - home to 40 per cent of the world's population between them - seeking to shore up their influence in their respective regions.
Not far from the proposed rail link are areas which China and India both claim as their own, and over which there was a border war in 1962.