The former England skipper was told he could leave Stamford Bridge at the end of the 2015-16 campaign, only to be offered a one-year extension on the back of Antonio Conte's appointment as Blues boss.
There was a time where City seemingly made an approach, however, with Terry having been strongly linked with a switch to the Etihad Stadium back in 2009.
"I spoke to Roman [Abramovich] at the time and told him I want to stay. Manchester City made an offer," the Blues captain said on Play to the Whistle.
"It gives you bargaining power to go in and renegotiate a contract."
Terry has remained at Chelsea in a bit-part capacity and has made only five Premier League appearances for the Blues this season.
Antonio Conte has instilled a 3-4-3 formation with Cesar Azpilicueta, David Luiz and Gary Cahill as the primary centre-backs, and Victor Moses and Marcos Alonso as wing-backs.
Despite being a back-up option at Stamford Bridge, the 36-year-old insists his heart is set on remaining at the club.
"I'm not sure [if he would move to China]," he added. "For me, I want to stay at Chelsea."