Lara, who shared the lead with Jyoti Randhawa after the first round, completed 36 holes at 10-under-par 130. Gregory Bourdy also shot 66 and is one stroke back at minus-nine.
Lian-Wei Zhang fired a 7-under 63 in the second round. That moved him into a share of third place at 8-under-par 132. He was joined there by Juvic Pagunsan and Andrew Buckle, who each shot 65 in round two.
Randhawa managed a 1-under 69. He stands alongside Jeev Milkha Singh in sixth place at minus-7.
Lara opened with his second birdie in two days on the par-5 third at Hong Kong Golf Club. After five straight pars, he tripped to a bogey on the ninth to make the turn at minus-6.
The Spaniard atoned for his bogey on nine with a birdie at the 10th. Lara birdied the par-5 13th to create a four-way tie for the lead at minus-8.
Lara sank a 7-foot birdie putt at 15 to take the outright lead. Bourdy, who started on the 10th tee, birdied the seventh to join Lara at minus-9.
However, Lara birdied the 17th for the second straight round to move back atop the leaderboard at 10 under. He parred the last to remain there.
'I have been playing well the last two months,' Lara stated. 'I have been hitting the ball so well and have just had a short break from those two tournaments at the end of last season, so I am still confident.'
Bourdy sank a birdie putt the 11th to get to minus-6. He posted his next birdie on the par-4 16th. After four pars around the turn, Bourdy birdied three to grab a share of the lead at minus-8.
The Frenchman kept pace with Lara with a birdie on the seventh. However, Bourdy carded back-to-back pars to close out his round and end one back.
'I think 9 under after two rounds is a good score here,' admitted Bourdy. 'I am driving it well and steady which is important for this course.'
Zhang flew up the leaderboard with five birdies over his opening nine holes. After a bogey on the first, he eagled the third and birdied the fourth to move to 8 under. Zhang got within one of Lara with a birdie on six, but he bogeyed the next and parred the final two holes to finish at minus-8.
Simon Khan and Adam Blyth each carded rounds of 2-under 68 Friday. They moved into a share of eighth place at 6-under-par 134. They were joined there by Anton Haig (65), Damien McGrane (66), Thammanoon Srirot (66) and Thongchai Jaidee (66).
Defending champion Colin Montgomerie is one of five players one stroke further back at minus-5.
The cut line fell at even-par 140 with 68 players moving on to the final two rounds. Among those missing the cut were two-time U.S. Open champion Retief Goosen (141), Jean-Francois Lucquin (142) and Paul McGinley (144).