The Zhejiang College of Sports, to which Sun is affiliated, has also withheld his monthly allowance after the 21-year-old, who won two freestyle gold at the London Olympics last year, missed training for over 40 days, the report said.
"Although Sun Yang has realised what was wrong with him and he promised to put it right, we have to punish him as everyone is equal when it comes to rules," college dean Li Jianshe was quoted as saying.
Sun shot to fame after becoming the first Chinese man to win an Olympic swimming gold medal, transforming him into one of the country's most sought-after sportsmen.
According to the report, Sun has fallen out with his long-time coach Zhu Zhigen who felt the swimmer had too many commercial obligations.
"Zhu has been coaching Sun Yang for 10 years and I don't think their bond is so fragile," Li said.