The 23-year-old South African moved to 18-under 198, three shots ahead of defending champion Nicolas Colsaerts of Belgium.
Grace started the third round one shot off the lead, but gained four shots in three holes, sinking a 15-foot eagle putt on the sixth green.
On a day of light winds and low scoring, Fabrizio Zanotti of Paraguay also shot a 64 to move to 14 under, four strokes back. Alexander Noren of Sweden had a 63 to join four other players at 13 under.
Grace is looking for his third victory on the European Tour in 2012 having already won the Joburg Open and Volvo Golf Champions tournaments in South Africa in January.
Grace's confidence is high after having beaten major winners Retief Goosen and Ernie Els to win The Champions on a very similar course at Fancourt in South Africa.
“I can draw from experience,” said Grace who had seven birdies in his round and only dropped one shot when he three-putted on the 14th green.
“I am feeling really positive after getting my first two wins early in the year and just wanting to keep on pushing on from there. The difference all this year has been that I have been holing more putts.
“But this course here in China is very similar to Fancourt. It is long has the same links feeling about it and I am getting the same feelings.”
Colsaerts, trying to defend the title he won last year and playing alongside Grace, started slowly but four birdies on the back nine allowed him to shoot a 6-under 66.
Noren's 9-under 63 was the lowest round of the day. He was joined at 13 under by France's Jean Baptiste, who had held a share of the halfway lead, but dropped back with a 2-under 70.
The other overnight leader, Gary Boyd of England, started his third round by dropping two shots in three holes. He had a 71 and was six shots behind Grace.
In Jakarta, defending champion Lee Westwood birdied two of the first four holes and moved to 13 under at the Indonesian Masters yesterday before lightning and rain halted the third round.
Zaw Moe of Myanmar was second at 9 under through four holes when play was suspended at the Royale Jakarta Golf Club.
“The suspension stopped a bit of momentum. But if it is dangerous weather out there then it is the safest thing to do,” Westwood said. “It is disappointing for everybody - the players, sponsors and the spectators. But this is the nature of the weather in this part of the world.”
Lee Sung of Korea, Shiv Kapur of India and Bernd Wiesberger of Austria were tied at 7 under. No players completed the third round.
The 70 golfers will resume play early Sunday.
In San Antonio, Texas, former British Open champion Ben Curtis maintained his two-stroke lead over David Mathis at the Texas Open after more than a dozen players finished the second round Saturday.
Play had been suspended because of darkness Friday following a two-hour storm delay. Curtis was at 10 under, and Cameron Triangle and Matt Every will start the third round three shots back.
Every began Saturday with a birdie on No. 17 to move into a tie with Mathis, only to fall back to 7 under when he finished the round by missing an 8-footer for par.
Blake Adams, Ryan Palmer and Hunter Haas are tied for fifth at 4 under.
