Apparently, this is all to do with the US's psychological projection that it is really China that is spying on everyone and not its own NSA.
Three US officials as saying the sanctions probably would come next week in advance of Chinese President Xi Jinping's visit later in the month.
The United States is also considering sanctions against Russian individuals and companies for cyber-attacks.
The Chinese Embassy spokesman Zhu Haiquan said in a statement earlier this week that its government staunchly upholds cyber security, firmly opposes and combats all forms of cyber-attacks in accordance with law.
Zhu said China wants enhanced dialogue and cooperation with the United States and that "groundless speculation, hyping up or accusation is not helpful to solve the problem."
The US government has suffered a series of embarrassing cyber-attacks in recent months, including one on the White House Office of Personnel Management (OPM) that potentially provided a treasure trove of data about government employees to foreign spies.
US officials suspect that attack was linked to China, which has denied any involvement in hacking US databases and says it too has been a victim of cyber-attacks.
It will be interesting to see what form the trade sanctions will take. If the US bans exports from China then it means that most of its technology, which is made there, will be kept behind the bamboo curtain.