The Mr. Vettel snatched Pole from his teammate Kimi Raikkonen at the last sec with a brilliant final lap of 1:31.095 to put him in 2nd, ahead of the MercedesAMG's Valtteri Bottas.
The two Mercedes cars were next.
Although Verstappen recovered to finish fourth on track, a 10-second time penalty for his clash with Vettel dropped him to fifth in the final standings behind the second Mercedes of Lewis Hamilton, who had a subdued afternoon.
Hamilton was the best part of half-a-second down on Vettel, who will be the favourite to convert his pole into a third victory and extend his championship lead. He has won five times in China, including a year ago, and has won the pole six times.
At Red Bull, Max Verstappen has appeared to have a slight edge over Daniel Ricciardo, only for mistakes to let him down.
"By the end of the day the pace was looking good and I think we can be happy with the car's performance". I think from my side there wasn't much to do. "I think if we do our homework, if we get the vehicle balance right and we get everything together, then it should be a good weekend - I don't see why not". Romain Grosjean took the 10th spot and was just 0.036s behind Sainz's Renault.More news: Mary River Turtle: Rare 'Butt-Breathing' Reptile Joins Endangered Species List
"I was a bit beaten up, but knew that if I could get a tidy lap and have a little bit of margin, I can push it".
Ferrari and Mercedes set their Q2 fastest laps on soft tyres.
Ferrari certainly has the advantage in Shanghai and the pace too, lasting more than Mercedes on the more durable rubber. However, Verstappen ran out of space at the apex after locking his rear tyres, making contact with Vettel on the outside and pitching them both into a spin.
"They were just too fast on the fresh tyres so I didn't want to compromise my race to the guys behind but then obviously he did a mistake, he locked up, which happens".
Fernando Alonso led teammate Stoffel Vandoorne in 13th and 14th, with McLaren again qualifying slowest of all the Renault-powered cars, this week by around 0.3 seconds.
Hamilton could at least depend on his car's impressive reliability, collecting points for the 28th race in a row and claiming outright a record he had previously held jointly with Ferrari's Kimi Raikkonen.
Lance Stroll in P18 led the Sauber drivers, with Charles Leclerc, who nearly crashed his vehicle when he ran wide out of the last corner before his final lap, heading Marcus Ericsson by half a second.