The Northern Irishman battled to a one-under-par 71 after starting the day with a three-shot advantage on the difficult Sheshan course, his mediocre display allowing five other players to move within three strokes with one round remaining.
McDowell posted an 11-under 205 total, while Japanese surprise package Hiroshi Iwata (68) birdied the last to occupy second on 10-under in his first WGC event, with German Martin Kaymer (66) and American Bubba Watson (69) two strokes behind.
McDowell is seeking to become a wire-to-wire winner and keep the WGC series in Northern Irish hands after Rory McIlroy, who is not playing here, won the Bridgestone Invitational in August.
Morning rain made the thick rough more dangerous than ever but McDowell largely avoided it, though he had to remain patient on a front nine that took three hours to negotiate as play slowed to about the same pace as rush hour Shanghai traffic.
“Let’s be honest, I’ll take this position any week you offer it to me, a one-shot lead going into the last round on a course that I enjoy,” McDowell told reporters.
“I didn’t score quite as well as the last couple of days but gave myself some confidence from a ball-striking point of view that I can get the job done tomorrow.
KAYMER’S HOT PUTTER
“I tried to execute a conservative game plan when I could and rely on the putter. I hit a lot of good putts that didn’t go in and that’s the main difference between shooting one-under and three-or-four-under.”
Second-placed Iwata seemed undaunted by his position, though that may have been an attempt to downplay the pressure of being in such prestigious company.
“Maybe tomorrow coming up the last few holes I might get a little bit nervous but so far I’m calm,” said the world number 127, who is third on this year’s Japan Tour money list after annexing his first career win at the Fujisankei Classic in July.
Kaymer, meanwhile, zoomed into contention with the best round of the day, a seven-birdie sortie that he credited to a co-operative putter.
“The first two days I played really well but the putter was a little cold,” the U.S. Open champion admitted. “Today I made a couple of mid-distance putts, so I put myself in a good position.”
Masters champion Watson also had seven birdies, including one at the par-five eighth where he missed a four-footer for eagle.
A double-bogey at the par-four 10th was a big setback but four birdies in the final five holes helped his cause.
“He was awesome today,” McDowell said of Watson.
(Editing by John O’Brien)