The above hadith is often quoted to emphasis gaining of knowledge other than Islamic knowledge because at that time, China did not have Islam but the hadith says so. I have heard this may not be authentic hadidth. Is this true?
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This Hadith is fabricated, it has no Sanad.
I have heard from our Masjid Imam who was a learned Imam in well educated area that he could not found source of this hadith even though he read many book. Therefore this hadith is not true and can be treated as fabricated.
This link on IslamQA also says this is farbicated hadith. The correct hadith is
The mentioned hadith can be found in Kanz al-Ummal , No 28697: The Prophet (SAWA) said, "Seek knowledge even in China, for verily to seek knowledge is an obligation on every Muslim."
Seeking knowledge is therefore not restricted on seeking Islamic knowledge, but knowledge in general when it is useful for the development and advancement of a Muslim himself and its community.