Manley carded a third round of 66 in Fanling to finish 10 under par, one shot ahead of Australia's Wade Ormsby and India's Shiv Kapur, with defending champion Miguel Angel Jimenez, fellow Spaniard Jose Manuel Lara and England's Steve Webster another shot back.
"Pretty much from the first hole onwards, every iron shot was right down the pin," said Manley, who fired six birdies and two bogeys.
"If it had been a good day on the greens it could have been a really low round, so it was disappointing not to capitalise, but I feel very confident the way I'm playing and I'm really excited about tomorrow.
"I wanted to be leading after three rounds, and I wanted to be in the last group, so I'm delighted. There's a lot of golf left, but winning would mean the world."
Despite only securing his card via the qualifying school last month, world number 275 Manley represented Wales in the World Cup in Melbourne the following week and hit the headlines when he followed a hole-in-one in the third round with an 11 on the next hole.
To make matters worse, Manley was then told the car he thought he had won for his ace was only on offer in the final round, but the 34-year-old did at least go on to finish joint eighth in the individual event.
Starting today one behind South African Jbe Kruger, Manley went to the turn in 32 and picked up further shots at the 10th and 13th, before missing short birdie putts on the next two holes.
He then suffered a stroke of bad luck on the 16th, when his approach to the par four hit a sprinkler head on the edge of the green and bounced around 60ft beyond the pin.
"I was really unlucky on the 16th, when I landed the ball in the perfect position but it hit the sprinkler and went to the back of the green," Manley added. "That was disappointing, but I was pleased to get back to 10 under with a birdie at the 17th."
Ormsby and Kapur matched Manley's 66 to lie nine under, while Jimenez, Lara and Webster all returned rounds of 65, the joint lowest score of the day.
Jimenez became the oldest winner in European Tour history when he triumphed here last year and is seeking a record-equalling fourth win in the event with his 50th birthday less than a month away.
"I hope I can keep hitting the ball the way I'm hitting it and knock in some putts to get the victory here, I would love it," said Jimenez, who carded seven birdies and one double bogey. "I love this golf course."
Sweden's Joel Sjoholm, who was almost disqualified from the tournament before his first round, also carded a 65 to finish three shots behind Manley on seven under.
Sjoholm overslept on Thursday morning and only arrived on the first tee with moments to spare before his tee time, having to play the first hole without his golf shoes.
The 28-year-old, who lost his European Tour card at the end of the 2013 season, said: "I'm pretty excited to be where I am right now.
"Whatever happens tomorrow it's been a great week for me. It has been a struggle the whole year for me so hopefully I can have a good day tomorrow and bring myself back for 2014."