Goosen, a two-time U.S. Open winner, has a three-round total of 20-under 196 at the par-72 Yalong Bay Golf Club.
First-round leader Lu Wen-teh of Taiwan shot a 69 and to move into second place, one stroke ahead of 2005 U.S. Open winner Michael Campbell, whose up-and-down round of 70 included three bogeys and four birdies.
Goosen rebounded from an even-par first nine to eagle the par-5 13th hole from 20 feet. The South African sank a 15-foot birdie putt on the next hole before rounding off his day by draining a 40-foot putt for another birdie on 18.
'The (birdie) on 18 was kind of a lucky one,' he said. 'I was trying to hit that close and it happened to go in. Sixteen was unbelievable. It felt like an eagle.'
Campbell, who was runner-up to Goosen at last year's China Masters, admitted he is now a long shot to reverse that result this year.
'The putts weren't going in. They kept shaving the holes on four or five occasions and it was pretty frustrating,' the New Zealander said. 'Six behind Retief is a lot, but you know I need a good strong start tomorrow. Retief's putt on 18 was like a final nail in the coffin. It was a good putt.'
Despite Campbell's pessimism, Goosen refused to start celebrating.
'I'm not going to get ahead of myself,' said Goosen. 'It's not always easy playing with a big lead. Everyone expects you to win and it puts pressure on you.'
Scotsman Simon Dunn shot a 66 to move into fourth, seven strokes off the lead, while Thai teenager Chinarat Phadungsil had a 64 to share fifth with England's Yasin Ali.
The 43-year-old Lu said while he's all but given up on the title, he's happy with his performance against the two major winners.
'I am satisfied with the way I played,' he said. 'I didn't think about chasing Retief or Michael. I just played my own game and see if I could learn from these two great players.'
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