They're in China. Marriage is quite different there.
This article explains what it is like. And yes it's wrong that it's like that, but that's the way it is.
Though lying is a moral issue, this woman turned it into a legal issue when she used lies to get married (legal issue) and have a kid (legal issue in China).
While he should love his child unconditionally, the reality of it is that an ugly daughter screws a person over for life in China. If he were to forgive his wife and stay with her, or at the very least keep his daughter, he would then either have to pay for plastic surgery for his daughter - and probably have very little money left to take care of himself when he's old, and put his daughter in this same position when/if she has an ugly child, and maybe set
himself up to be sued by her future husband - or pay an insane dowry to get someone to take an ugly chick, and have no money left, and probably not manage to get a son-in-law with the means to take care of him. Suing the wife and disowning both of them is the only way he can recoup the money he has put into marrying and supporting a liar, and the only way he can go on to marry someone else and have another child. I'm sure he's not thinking "I don't like this baby because it's ugly" but "I'm screwed now because this woman got me to marry her based on lies, so I must do what I need to do to get out of that." This is a deep-rooted issue with society in China, not necessarily something wrong with this particular man.