Nadal overtook Djokovic to top the rankings on Monday for the first time in more than two years and had no problem brushing aside Alexandr Dolgopolov 6-3 6-2 in 58 minutes.
The Ukrainian held his own for the first six games but a run of seven games in a row for Nadal made the result a foregone conclusion.
Defending champion Djokovic continued his fine form in China by allowing Spain's Marcel Granollers just two games in a 6-2 6-0 victory.
The Serbian beat Nadal convincingly in the final in Beijing on Sunday for his first title since April and is producing some of his best tennis of the season.
The only concern for Djokovic came early in the second set when he hopped in pain after appearing to hurt his right foot or ankle.
He called the trainer to have it strapped but it did not adversely affect him as he wrapped up the win in an hour and 10 minutes without dropping another game.
Given Nadal does not have any ranking points to defend until February, it is likely he will remain number one for some time, but Djokovic vowed to keep the pressure on.
He said on www.atpworldtour.com: "There's several tournaments left for me, this included, where I will try to go as far as I can eventually (to) have an opportunity to get back to number one, (but) it doesn't depend only (on) me, it depends (on) Nadal.
"Now to build that confidence, try to (be more) aggressive on the court and get my game back to where it should be - that's the primary focus."
Federer played his first match since losing to Tommy Robredo in straight sets in the fourth round of the US Open.
Federer was a little rusty and went an early break down against Andreas Seppi before recovering to win 6-4 6-3 - his 10th straight victory over the Italian.
Fourth seed Tomas Berdych and seventh seed Jo-Wilfried Tsonga were also straight-sets winners.
Berdych beat Spain's Feliciano Lopez 7-6 (7/5) 6-2 while Tsonga, who needs a good showing in Shanghai to boost his hopes of qualifying for the ATP World Tour Finals, saw off Pablo Andujar 6-3 6-2.
Berdych withdrew during his semi-final against Nadal in Beijing because of a back problem and is happy with how he is feeling.
The Czech said: "I wouldn't say (my back is) 100 per cent, but I decided I was competitive enough to go on court and try to play. Looks like it was a smart decision. I wasn't limited at all."
Sixth seed Juan Martin del Potro, the champion in Tokyo last week, struggled with a fever but recovered from a set down to defeat Philipp Kohlschreiber 3-6 6-3 7-6 (7/4).
Stanislas Wawrinka had an equally tough time, eventually beating Kevin Anderson 6-4 3-6 7-6 (7/5), while third seed David Ferrer saw off Lukas Rosol 6-3 6-4.
The day's only upsets saw John Isner knocked out by Carlos Berlocq, who next meets Nadal, while Fabio Fognini benefited from Robredo's retirement to set up a clash with Djokovic.
Gael Monfils will meet Federer after beating Vasek Pospisil 7-5 7-6 (7/4) and there were also wins for World Tour Finals contender Milos Raonic, Tommy Haas, Kei Nishikori, Nicolas Almagro and Florian Mayer.