The 36-year-old from Malton is in a six-way tie for second place on four under, four shots adrift of American Luke Guthrie.
But stood on the 18th tee at Lake Malaren he had second place all to himself before a double bogey saw him slip back into the pack.
Nevertheless, the continuation of his good form over the weekend will almost certainly see him make up the six places he needs to reach the top 60 on the order of merit and all but assure himself of a place at the Dubai World Championship next month.
“It’s a tough course and anything under par is good, but it’s a shame to double the last like I did,” said Dyson, who is chasing his first win for more than two years and the £726,657 first prize.
“I didn’t hit a bad drive and it kicked right into the rough. It wasn’t a great lie and I maybe tried to do too much with it. It snagged way left on me and I had a 30-yard bunker shot that was semi-plugged.
“I left it in the bunker, thought I hit a good bunker shot for my fourth, but it didn’t get any spin and released about 12ft past and I missed it coming back. It’s easy to make a six.
“You do all that hard work and drop two shots at the last but apart from that I was really pleased.”
Guthrie added a 71 to his opening 65 to finish eight under par in Shanghai, with Paul Casey, Scottish pair Scott Jamieson and Craig Lee, Argentina’s Ricardo Gonzalez and Thailand’s Thongchai Jaidee joining Dyson on four under.
“I think anything in the red today was a good score. The winds were back up, it was a little cooler even and I forgot my sweater so I was a little cold out there,” said Guthrie, who made the 7,000-mile journey to China after finishing fifth on the PGA Tour in Las Vegas last Sunday.
“I played solid again, made a few more bogeys which was disappointing and hit a few poor shots, but hung in there and posted something in the red.
“It’s only halfway, there is so much more golf to go. I think the weather is maybe supposed to get a little better so I’ll have to come out here ready to go and put some red numbers on the board.”
Former world No 1s Lee Westwood and Rory McIlroy are seven shots off the lead on one under, with Race to Dubai leader Henrik Stenson two over after struggling to a 74.
Sheffield’s Danny Willett is tied 28th on two over par after a 72.