China will also review the merger of two Russian potash firms – Uralkali and Silvinit – given the major impact the two deals would have on China, the paper cited the unnamed source as saying.
The report was another indicator that China, as the world's biggest importer of fertiliser, is wary of further concentration in the market, following BHP Billiton's launch of a hostile bid for Potash Corp last month.
BHP declined to comment on the Chinese newspaper report.
The company has said the deal only needs approvals from regulators in Canada and the United States, where Potash Corp sells around half its production.
China buys around seven per cent of the output of Potash Corp, which controls around one-fifth of world production of the key crop nutrient.
BHP Billiton does not currently produce any potash but does have potash resources it could develop in the future.
China's largest fertiliser distributor, Sinofert Holdings Ltd, said last week it was worried about the impact that a BHP deal would have but would not say if its parent, Sinochem, was planning a rival offer.
Government departments and state-owned Sinochem Group have held meetings recently to review the possible impact the two high profile acquisitions could have on China and about possible countermeasures, according to the source quoted by China Business News.
Industry analysts have mentioned Chinese companies or the government's sovereign wealth fund as possible counter-bidders against BHP.