Sheffield Wednesday: Aston Villa chairman pulls plug on Joe Bennett deal
Bennett - who enjoyed a successful loan spell at Hillsborough last season - had passed a medical and agreed personal terms on a three-year deal with just formalities to be agreed between the Owls and Villa.
But the Birmingham Mail reports Xia stepped in at the 11th hour as he is not willing to sell a player to a promotion rival.
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Hide AdVilla boss Roberto Di Matteo had given his blessing for the move to take place with Jordan Amavi and Aly Cissokho higher in the pecking order at Villa Park, leaving Bennett's future in limbo.
Carlos Carvalhal had been keen to add Bennett to his squad to create strong competition at left back with Daniel Pudil.
Bennett made four appearances for the Owls before injury ended his loan spell.