El Shaarawy had reportedly been set to sign a three-year deal with Shanghai Shenhua worth up to 16 million euros ($18.1 million) a season.
But Sky Sport Italia reported the 26-year-old had second thoughts and did not want to leave the Italian capital.
Gazzetta dello Sport claimed the Chinese side refused the player's demands to have an imput into the club's choice of coach and playing staff.
Shanghai Shenhua, currently 12th in the Chinese Super League, are coached by former Benfica, Atletico Madrid and Watford manager Quique Sánchez Flores of Spain.
El Shaarawy - nicknamed 'The Pharoah' because of his Egyptian ancestry - only has a year left on his contract with the Serie A club, having joined Roma in 2016 from AC Milan after a loan spell in Monaco.
The 23-times capped Italian international is reportedly looking for a new deal worth four million euros a year with Roma.
He scored 11 goals in Serie A last season, as Roma finished sixth and qualified for the Europa League.