After betting with his friends that the infant was just a doll, the policeman touched her face then grabbed her from her father, before lifting her up and smashing her on the ground, the report said.
The baby suffered three cranial fractures and was taken to hospital. She will be sent to Beijing for further tests.
Guo, who was off-duty at the time, received 15 days of disciplinary confinement after the incident but no additional punishment.
Details of the case generated outrage on Chinese social media after which authorities promised to take action.
"All officials will handle the case according to law and no leniency will be shown," Linzhou city officials said in a statement.
Last month, a two-year-old Chinese girl was thrown to the ground by a man after he had a row with the child’s mother over parking. She died a few days later.