This would bring the venture back to a 50-50 split for operations in China including setting the budget and picking company leaders, and would allow SAIC to retain a 51 percent share on the sales side of the business.
This 51-percent share of the sales operations would allow SAIC to keep control of booking revenue for the joint venture, called Shanghai GM.
The agreement between GM and SAIC must attain regulatory approval from Chinese government officials.
In January, during the Detroit auto show, GM CEO Dan Akerson said he hoped to wrap up the buyback of the 1 percent share from SAIC in the coming months.
In 2010, in a deal worked out the year before when GM was trying to avoid bankruptcy, GM sold 1 percent of Shanghai GM to SAIC for about $85 million.
The source would not say if an agreement had been made on how much the buy-back will cost GM.
The agreement awaiting Chinese government approval calls for GM and SAIC to share 50-50 in the operational side of Shanghai GM. SAIC would keep a 51 percent share in the sales side of the joint venture, the source, who wished to remain anonymous, said.
Shanghai GM is the biggest automaker by sales in China.
SAIC is in a similar venture 50-50 joint venture with Volkswagen AG (VOWG_p.DE), called Shanghai Volkswagen.
In March, Shanghai GM sold 113,047 vehicles, a rise in sales of 11 percent from a year earlier, and Shanghai VW sold 106,678 vehicles, up 14 percent.
Car sales in China climbed 5.2 percent in 2011, the slowest pace of growth since the nation's car culture took off at the turn of the century, after Beijing scrapped tax incentives for small cars.
China is the world's largest auto market, followed by the United States.
The agreement between SAIC and GM to go back to a 50-50 venture on the operational side of the alliance was reported on Wednesday by the Wall Street Journal.
(Reporting by Bernie Woodall)