Ariya carded four-under-par 68 to go seven under for the tournament in blustery Hainan, an island in southern China, with sister Moriya tied in second and four shots off.
Moriya, who at age 24 is 16 months older than her sibling, shared second place with Jennifer Song of the United States and Mexico's Gaby Lopez.
Ariya is chasing an 11th victory on the US-based LPGA Tour and, having started the day in joint second, surged to the summit with seven birdies against three bogeys.
Ariya said that she has a combustible relationship with Moriya, but is relishing the prospect of fighting it out with her sister on the golf course.
"I think (it is) going to be so much fun," she said.
"We stay together this week... we woke up same time like both days already. We walk to the course together.
"I think we (are) very nice to each other when we're on the golf course, but off the golf course I think we (are) not nice to each other."
Song, ranked 48th in the world, said she enjoyed playing the role of hunter.
"I'm excited, I think I play better when I'm chasing from behind," she said.
Overnight leader Thidapa Suwannapura, another Thai, struggled in the hot and windy conditions and shot a 75, falling to tied sixth.