After opening with two rounds of five-under 67, Lee carded a one-under 71 in the third round on Saturday to be 11 under for the tournament.
The 28-year-old from Perth had birdies on the fourth, 10th and 14th holes on Saturday, but would have been kicking herself after registering bogeys on the par-5 ninth and 13th holes.
Lee is now seven shots behind leader Mao Saigo of Japan, who followed a four-under round of 68 on Thursday with seven-under rounds of 65 on Friday and Saturday to be sitting pretty at 18 under going into Sunday's final round.
Saigo has a one-shot lead over world No.4 Yin Ruoning after the Chinese player carded a stunning nine-under 63 in the third round. Her round on Saturday included seven birdies and an eagle on the par-5 17th hole.
Second-round leader Sei Young Kim, of South Korea, is outright third at 15 under after a three-under round of 69 on Saturday.
Lee is a two-time major winner but is yet to taste success this year and will need to be at her best to claim victory on Sunday.
The two other Australians in the field - Hira Naveed and Hannah Green - are right out of contention.
Naveed shot a one-under 71 on Saturday to be four under for the tournament.
Green is sitting at even par for the event, after carding a three-under 69 on Saturday.
Two of the LPGA's top players, American Nelly Korda and New Zealander Lydia Ko, are not in the field this week in China. Both are entered next week in the BMW Ladies Championship in South Korea.
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