Cong Jen, 29, climbed out of the 15th floor of the hospital building with his two-year-old girl, Yao, in his arms.
He then threatened to cut the rope, which would have plunged the father and daughter to their deaths.
The dad took the desperate action over a row about the medical care of his wife, who has been diagnosed with kidney failure, the Mirror reports.
He claims that the hospital in Xuchang, in Henan province, is to blame for Kao's condition and wanted her case to be given priority.
Cong and his daughter were suspended precariously from the window for several hours as police negotiators attempted to talk him down.
When talks failed, officers made a grab for the pair and managed to pull them back inside the building. Cong was arrested and faces an attempted murder charge.
His daughter has been placed in the care of her grandparents while her mother recovers.