Various reports in England have the Scottish champions as one of the interested parties in the 19-year-old. A raft of Premier League and Championship clubs are keen to land the player on a loan deal.
McAtee has featured three times for Pep Guardiola’s side this campaign and is one of the most promising talents in the club’s academy.
It is understood the Spanish manager is happy for the teenager to remain at the club but if the right offer is out forward.
The Scottish champions have already snapped up Amad Diallo from Manchester United to supplement Giovanni van Bronckhorst’s attack.
McAtee, however, would be a more direct replacement for Ianis Hagi.
The Romanian is out for the remainder of the season after picking up an injury in the 4-0 win over Stirling Albion in Scottish Cup.
Manchester City describe McAtee as "technically gifted and versatile attacking player”. He predominantly plays through the middle in an attacking role.
This season he has 19 goals in 20 games for the club’s Under-23 side and has been a regular goal scorer during his time in the City academy.
He is contracted to City until 2023.