City doesn't necessarily need English players. Any nationality is fine as long as the chap was registered for three consecutive seasons or 36 months with a member club of the England/Wales FA when they were between 16 to 21 years of age. Almost all of the guys who meet this criteria will be English, of course.
So they could buy Suso from Milan, for example, if they think he's good enough. And they might keep their Portuguese youngster Marcos "Rony" Lopes (looks like a talented player; was on loan to Lille last season) this season. Schneiderlin qualifies as home grown too, and I'd rather City got him than United or Arsenal. Sigurdsson counts as home grown too, and he's resurrected his career enough at Swansea to bury it again at City.
Anyway, if their 17 foreign players are mostly top quality and fit, then the home grown thing doesn't hurt them that much. Teams usually just use 21 or 22 players in the league I think, so they could easily just rebuild their foreign legion and get younger there, while mixing in 3 or 4 home growns who're decent enough to do a job on the odd occasion they're called upon.
It's not a killer thing to not have enough home grown players right now. It could be though, if the new proposed rules get approved, which will see the foreign player quota reduced to 13 eventually. Now, if they're anticipating that, then it makes sense to jump ahead and snap up HG players before things get crazy.
