Islam prohibits alcohol but authorities in Niya county in China's troubled Xinjiang region held a beer drinking contest last Monday, three days before the start of Islam's holiest month, with cash prizes of up to $160 for winners, the Global Times said.
The county is in southern Xinjiang, the heartland of the Uighur ethnic minority, who are mostly Muslim.
Uighur rights groups say restrictions on Islam have added to ethnic tensions in the far western Muslim-majority region, where clashes have killed hundreds in recent years.
Read: Exiles angered as China holds beer festival in Muslim county
China says it faces a terrorist threat in Xinjiang, with officials blaming "religious extremism" for growing violence.
Dilxat Raxit, a spokesman for exiled group the World Uyghur Congress, slammed the festival as an "open provocation" to faithful Muslims in a statement.
But the Global Times cited La Disheng, professor at a Xinjiang Communist party training school as saying that "many Uighurs... like to drink for pleasure".
He labelled those condemning drinking among local Muslims as "extremists and separatists".
The Communist party tightly controls the media, and initial reports about the beer festival were apparently deleted on Tuesday.
China has banned civil servants, students and teachers in Xinjiang from fasting during Ramazan and ordered restaurants to stay open, official websites said this month.
Xinjiang's government-run Tianshan website showed that officials in Niya county organised an event where local Muslims made and ate rice dumplings on Saturday, three days after the start of Ramazan, during which devout Muslims abstain from all food and drink during daylight hours.
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