The education authority in Gansu province criticised the kindergarten in Linxia, where the girl read the Islamic religious text.
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The local government said it "strongly condemned the damaging act to the physical and mental health of the younger generation", Hong Kong-based South China Morning Post reported on Friday.
The video was titled "Cute girl reciting scriptures in Gansu." In the video, the unidentified girl is seen wearing a black Muslim head covering and sitting in a classroom with dozens of other students apparently all in Muslim attire.
Many people commenting online were angered by the video, the report said.
Gansu is home to about 1.6 million Muslims.It has the third highest population of people holding the faith among China's provinces and regions, behind Xinjiang and Ningxia.
China's communist government is atheist, but people are allowed to follow authorised religions under official controls.
The Gansu education authority cited the country's constitution and education laws, which state that "religious activities shall not get in the way of education."
Apart from religious institutions with government approval, schools cannot conduct religious activities or preach religion, the statement said.
"(They) shall not force or induce pupils to convert to a certain religion or establish any religious organisations in schools," the statement said.
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