Often described as Pakistan's "all weather friend", China is likely to extend a long-term loan, possibly at a low interest rate, to cover the cost of the project.
"The National Security Committee has approved, in principle, the acquisition of eight Chinese submarines," Additional Secretary in the Defence Ministry Rear Admiral Mukhtar Khan informed the National Assembly's Standing Committee on Defence on Tuesday.
Negotiations with China on the financial aspect of the purchase were in an advanced stage, he was quoted as saying by the Dawn daily.
Pakistan has been negotiating the purchase of submarines from China since 2011.
No details were given about the type of submarines.
However, there have been reports that Yuan-class Type-041 diesel-electric submarines were being considered.
The-Type 041 'Yuan' class is described by IHS Jane's Fighting Ships as a diesel electric attack submarine (SSK), potentially with Stirling air independent propulsion.
The purchase of eight such submarines may cost about USD 5 billion. Pakistan's submarine fleet comprises five Agostas two Agosta70 and three Agosta90B and three MG110 miniature submarines (SSI).
One of Agosta90B -- Hamza (Khalid Class) -- was indigenously constructed and commissioned in 2008 and another was partially completed here. The third was built in France.
"The navy has been pursuing different options for buying more submarines in view of the Indian move to expand its fleet," the report said.
Indian Navy currently operates about 15 submarines including the nuclear powered INS Chakra.
In 2004, Pakistan had expressed interest in buying German Type 214 diesel-electric submarines.
However, the deal could not materialise due to opposition in Germany to the sale of submarines to Pakistan.
Later, negotiations were held with France for acquiring Scorpene-class submarines.
The NA committee was told that France had refused to sell the submarines to Pakistan because of various reasons one of them being that India was buying the same submarines.
The Agosta submarine scandal of 1994 was another reason.