"We are interested in setting up a trade and energy corridor for China," he was quoted as saying by the state-run 'China Daily.'
Musharraf, who is on a five-day state visit to China, was referring to Gwadar port on the Arabian Sea coast in Pakistan's Balochistan province through which crude oil imports from Iran and Africa can be transported to Northwest China's Xinjiang Uygur Autonomous Region by land.
The Pakistan President, who discussed the proposal with top Chinese leaders in Beijing, said the route on which a feasibility study is being conducted is a shortcut compared with the one via the Straits of Malacca.
The Gwadar port is strategically located as it is quite near the Strait of Hormuz, through which 40 per cent of the world's oil passes, he noted.
China contributed about $ 200 million for construction of Gwadar port's first phase, which was completed in April 2005 when Premier Wen Jiabao visited Pakistan. It is reported that China will also finance the second phase, which will have nine more berths, an approach channel and storage terminals.
Musharraf said he is looking forward to the result of the feasibility study on transporting crude oil via mountainous regions in Pakistan and suggested that building a railway was an option. "We should look at the issue with strategic vision."
Although the proposed pipeline is not a project that can be launched soon, it could work well in the long run, said Sun Shihai, a researcher with the Chinese Academy of Social Sciences.
"It will help maintain peace and stability in the region when the commercial interests of China, Pakistan and a third country are involved," he said.
Musharraf, who arrived in Beijing on Sunday for a five-day visit, is also seeking Chinese help in developing nuclear energy.
China helped its traditional friend Pakistan set up the Chashma Nuclear Power Plant Phase I; and building on the 300-megawatt Phase II started recently. However, the report did not say whether China has agreed to offer any new nuclear reactor to Pakistan.
Pakistan, whose nuclear-power capacity is 437 megawatts, plans to increase the figure to 8,500 megawatts by 2030.
China and Pakistan vowed to enhance their cooperation in such fields as economy, trade and energy.
In a joint statement Tuesday night, both sides expressed their firm resolve to strengthen cooperation in all spheres and agreed to explore new ways to expand economic cooperation and trade to promote common development for the two countries and peoples.
The two sides are satisfied with the implementation of the Early Harvest Programme and agreed to expedite negotiations on the Free Trade Agreement. They emphasized that overland trade through the Karakoram highway should be promoted and were ready to adopt measures to facilitate such trade.
In the joint statement, the two sides expressed deep satisfaction with the progress being made on various Chinese-assisted economic projects in Pakistan, and agreed to encourage cooperation between companies, including setting up joint ventures, and supported the early launch of a joint study on expanding economic cooperation and trade.
According to the document, both sides agreed to set up a China-Pakistan joint investment company between the financial institutions of the two countries, reached an agreement in principle to upgrade the Karakoram highway, and signed a framework agreement on expanding and deepening economic cooperation.
As for cooperation on energy, both sides agreed to enhance cooperation in this field, and signed the Framework Agreement on Energy Cooperation.
Pakistan expressed its interest in construction of oil refineries, gas terminals, oil and gas storage and transit facilities. The Chinese side welcomed these proposals and agreed to assist in the development of oil and gas sector in Pakistan.
Both sides also agreed to enhance cooperation in the peaceful use of nuclear energy.
During Musharraf's visit, China and Pakistan signed 13 agreements of cooperation in such fields as trade and economy, energy, food, agriculture, health and meteorological science and technology.Apart from Chinese President Hu Jintao, Musharraf also held talks with top legislator Wu Bangguo and Premier Wen Jiabao.