The Australian ace swept round the 5.3-kilometre Shanghai circuit in 44m 12.891secs, with Italy's Rossi 3.036 seconds off the pace on his Yamaha, and American John Hopkins third on a Suzuki for his first podium.

Stoner, 21, the winner here in the 250cc class two years ago, started from fourth but took the lead on the first lap, setting the stage for a tight battle with the Italian master in the season's fourth race.

"It was a really difficult race today and with pressure from Valentino on the rear I made a couple of small mistakes," Stoner said.

"I think both of us were pushing quite hard."

Under warm sunshine and in front of 28,000 fans the two standouts battled from the opening seconds, with Rossi squeezing past on corners time and again, only for Stoner on his more powerful bike to roar past on the circuit's long straights.

With seven laps remaining a late-braking Rossi overshot the first corner, taking a trip through the grass and dropping to third behind Hopkins and sealing Stoner's victory.

Rossi eventually caught Hopkins in the race's closing moments, but rued the error that he said cost him the race.

"I tried to attack him because the braking on my bike was very good and I was quite strong," the 28-year-old Italian told reporters.

"I tried again on the straight but I went too far and I had to brake too deeply, and probably if I had not made this mistake I would have won."

"The championship is long and I will come back in Europe," he added.

Stoner and Ducati have shown top form early this season, chalking up two victories in three races prior to Shanghai and many expected them to win here despite Rossi's record-setting lap on Saturday.

The legendary Rossi, nicknamed "The Doctor," made it clear Saturday he would be in the hunt for the trophy when he smashed by more than 1.6 seconds the circuit record set by Spaniard Dani Pedrosa last year.

The victory in Shanghai now gives Stoner 86 points in the championship table, Rossi 71, and Spanish Honda rider Danni Pedrosa who finished fourth here 41, as the racers head to France in two weeks.

Marcos Melandri on a Ducati moved up to fourth with 41 points, but was unable to hold off pressure from Pedrosa as the Italian took fifth.

Meanwhile, Hopkins jumped four places to fifth in the standings with 39 points, as the Californian has shown improving form in the 2007 season, finishing fourth in Qatar and sixth in Turkey two weeks ago.

"I'm so happy with the race," said Hopkins, 23, who started from second after showing blistering pace all weekend.

For defending world champion American Nicky Hayden, it was another sub-par performance, finishing 12th after tumbling hard when Spaniard Toni Elias crashed into him on the first lap.

World champion Jorge Lorenzo of Spain was unassailable in the 250cc as he raced off from pole to take his third chequered flag of the year. Countryman and Aprilia rider Alvaro Bautista beat Italy's Andrea Dovizioso on a Honda for second.

The Czech Republic's Lukas Pesek won a thriller in the 125cc bikes, manoeuvring his Derbi bike past Spaniards Hector Faubel and Esteve Rabat on a Honda in the closing laps of the race.