The official, who spoke on condition of anonymity, suggested the reason was to avoid casting a shadow over Xi's visit rather than the emergence of any major agreement between the two sides over how to handle the issue.
Imposing sanctions before Xi's high-profile visit, which will include a black tie state dinner at the White House hosted by President Barack Obama, would be a diplomatic disaster, said the person briefed on the White House's thinking.
The Washington Post first reported the decision, citing a senior Obama administration official as saying it came after an all-night meeting on Friday during which the two sides reached "substantial agreement" on several cyber-security issues.
The newspaper quoted the official as saying sanctions were not off the table and China's behavior in cyberspace is still an issue. "But there is an agreement, and there are not going to be any sanctions" before Xi arrives on September 24, the official said.
Last week, US officials said Washington was considering sanctions against both Russian and Chinese individuals and companies for cyber-attacks against US commercial targets.
The sanctions Washington was weighing would not target suspected hackers of government data but rather foreign citizens and firms believed responsible for cyber-attacks on commercial enterprises.
If taken, the action would be the administration's first use of an executive order signed by Obama in April to crack down on foreign hackers accused of penetrating US computer systems.
Two industry sources following the matter closely said that the idea of imposing sanctions in general has only mixed support among big companies that would be the intended beneficiaries.
That is in part because of fear of retaliation and in part because it could make it harder to do business with existing partners that might be sanctioned.
The tech industry in general cares more about expanding access to the Chinese market, which is expected to be a major topic at the Seattle meetings that Xi will have with the heads of Microsoft Corp., Apple Inc. and other companies.
© Thomson Reuters 2015