On a gusting day of rough scoring, an even-par 72 was enough to propel Kim from a tie for third after round one into equal second at four under through 36 holes at the Buick LPGA Shanghai.
The 2025 Evian Championship winner even slashed the deficit in half from four shots to just two entering the weekend.
After opening with a blazing eight-under 64, leader Hye-Jin Choi could only manage a 74 on Friday to slip back to six under for the championship.
Fellow South Korean Amy Yang joined Kim as Choi's closest pursuer, the 2024 Women's PGA Championship winner also just two strokes back following a second-round 71.
Rising star Erica Hara, who mixed five birdies with five bogeys in an eventual 72, fellow Japanese Rio Takeda (72) and Spaniard Carlota Ciganda (73) are one shot further back in a three-way tie for fourth.
World No.2 and defending champion Jeeno Thitikul is lurking in joint seventh at two under with China's big home hope Ruoning Yin (74) after grinding out a second-round 73.
"It was so tough. It was brutal out there," the Thai said.
"Definitely it's bringing out all the skills on this course. I mean, the rough was so thick and unpredictable and then the green was so firm ... insane."
With a 69, German Esther Henseleit shot up 30 positions on the leaderboard to ninth at one under with the day's only round in the 60s.
Kim struggled to find her best stuff, also battling swing issues for much of the day before a chip-in birdie from a greenside bunker on the par-4 15 vaulted her back to four under.
"There were a couple holes where I honestly just tried to play it for the bunker instead of the green, knowing that greens have firmed up. You just have to make up and down," Kim said.
"Some of the pin positions were tucked as well, or were on a downslope of our landing area. Just strategically you really had to be precise.
"Was really tough out there today."
The 25-year-old is precariously placed 62nd in the season-long point standings with only the top 60 to qualify for next month's $US11 million Tour Championship in Florida.
A strong finish this week at Sheshan Golf Club would propel Kim comfortably inside the top 60 cut-off with three more events remaining before the showpiece finale in Naples from November 19-22.
Karis Davidson, in 55th position in the points race, is the next-best placed Australian after a second-round 74 left her in a tie for 17th at two over.
Triple major winner Minjee Lee, languishing in 76th spot in the season standings after six straight missed cuts, is equal 47th at six over following successive rounds of 75.
Comfortably sitting in 46th place in the points race, Cassie Porter is tied for 56th at eight over afteer two rounds of 76.
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