The dismissal of Xia on Friday generated international attention and criticism in domestic social media, and came as China's new leadership has taken measures to silence high-profile critics.
Xia, an economist, told AFP he believed he was dismissed because of his political views, particularly his support for Charter 08, a document signed by hundreds of intellectuals, dissidents and others urging pluralist democracy in China.
But Peking University said in a statement on its microblog account on Saturday that Xia was the school's worst-ranked teacher and the source of 340 student complaints since 2006.
It added that a university committee had voted in October 2012 to let him go but gave him one year to improve.
In the follow-up meeting this month it said 30 people voted to end Xia's contract, three people opposed, one abstained, and three people did not attend.
Users of China's popular microblog service Sina Weibo expressed doubt about the motives for sacking Xia.
One commentator using the name Leidaju claimed to have taken a course with Xia and said: "Although he sometimes held strong views, in general he was a good teacher."
The ruling Communist Party takes a hard line against dissenters who might challenge its power.
The Charter 08 co-author and 2010 Nobel peace laureate Liu Xiaobo is serving an 11-year jail term.
Since new leaders under President Xi Jinping took office earlier this year, authorities have tightened control over public discourse.
They have cracked down on social media -- a major forum for discussion -- and detained a few dozen activists calling for greater government transparency and other reforms.
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