Warring Red Bull duo Mark Webber and Sebastian Vettel were next up, but a second off the Mercedes' pace.
Mercedes took charge on the last lighter-fuel runs going into the final half-hour of the session.
Rosberg initially put in a 1m37.872s to knock Felipe Massa's Ferrari off the top spot.
This mark was then pipped by Webber, who went 0.2s faster just a minute later.
But Rosberg had more speed to come. Despite signs of tyre graining and being eight laps into a stint, he unleashed a 1m36.904s, backed off for a lap, then delivered the best lap of the morning with a 1m36.717s.
Mercedes then appeared to have superior pace on the race stint simulations in the final half-hour, although fuel load variations inevitably skew this picture.
Hamilton was ultimately 0.454s down on his team-mate, but 0.487s clear of Webber. Three tenths of a second split the two Red Bulls in third and fourth.
Jenson Button had been among the first to set a flying lap, albeit over half an hour into the session, and kept his McLaren near the top for a long while.
He ended up sixth, between the Ferraris of Fernando Alonso and Massa.
Button's team-mate Sergio Perez provided a bizarre end to the session when he crashed in the pitlane entry gravel trap, replicating the infamous incident that ended McLaren predecessor Hamilton's 2007 Chinese GP.
Adrian Sutil also had a stint in first place before ending up eighth, two places in front of Force India team-mate Adrian Sutil. Romain Grosjean's Lotus split them.
The Frenchman's team-mate Kimi Raikkonen provided the session's other main incident when he ran wide at Turn 9 and spun back across the track. Raikkonen resumed without damage.
Sauber rookie Esteban Gutierrez also had an excursion, exploring the gravel at Turn 1.
Ex-HRT third driver Ma Qing Hua made his Caterham debut in Charles Pic's car at his home event. The GP2 racer was last, 1.5s off team-mate Giedo van der Garde.
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