The 55-year-old, who guided Japan to the last 16 of last year's World Cup in South Africa, is currently in the eastern Chinese city to oversee the club's facilities.
"Hangzhou have a firm vision for the future," Okada told Japan's Nikkan Sports newspaper. "They want to win the Asian Champions League and become the top team in Asia."
If appointed, Okada's move could mark a watershed not dissimilar to the ping pong diplomacy which brought about a thaw in American-Chinese relations in the 1970s.
"Actual contract negotiations I have left to my agent, but I wanted to see the place with my own eyes and meet with the owners and ask about their plans.
"Nothing has been decided but it's a possibility," added Okada, who also led Japan to their first World Cup finals at the 1998 France tournament.
"It would be a challenge that excites me. China will become a key country in many ways and Asia needs to be more fluid [in terms of employment]."
Japan's controversial win over China in the 2004 Asian Cup final in Beijing triggered riots.
Chinese fans again booed the Japanese national anthem and burned the country's flag at the 2008 East Asian championships.
Many Chinese still harbour bitter resentment over Japan's military invasion and brutal occupation of parts of the country from 1931 to 1945, when tens of millions died.
Hangzhou finished eighth in China's top flight this year after being promoted in 2006 and bringing Okada in would be a major coup.
The club only avoided relegation again in 2009 after two clubs above them were punished for their part in a match-fixing scandal.
