World champion Hamilton, who has won three times in Shanghai including last year, topped the timesheets, clocking a fastest lap of one minute, 37.219 seconds in the afternoon after also flexing his muscles in the morning session.
There was a heart-stopping security scare in the afternoon when a man scaled a fence, ran across the tarmac between the Sauber of Marcus Ericsson and Nico Hulkenberg's Force India and climbed over the pit wall, before being tackled by officials.
Vettel stunned Mercedes pair Hamilton and Nico Rosberg to win in Malaysia two weeks ago but normal service looked to have been resumed in far cooler conditions in China, at least in the early going.
Rosberg was second quickest in the morning but Vettel's Ferrari team-mate Kimi Raikkonen produced a lap of 1.37.662 to finish second in an afternoon run briefly halted by red flags after Felipe Massa's Williams skidded into a wall.
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Hamilton, who has admitted his drawn-out contract talks over a renewed deal with Mercedes have become a "pain in the backside", did not look in any way distracted and signalled his intent with a typically aggressive display of pace.
- 'Ferrari close' -
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"Today was definitely an improvement on Friday in Malaysia," said the 30-year-old. "It was quite close between us and Ferrari. They look just as fast as they were last time out and Nico was quick as well, so we definitely have a race on.