Yang shot a 6-under 66 at the Mission Hills Country Club in the first major event on the tour this season while Lindsey Wright posted a 67.
World No. 1 Yani Tseng, the winner of three of the five tournaments played on the tour thus far this year, was alone in third at 68.
Yang's best finish on the circuit has been a solo second at the 2010 LPGA Championship. She needed just 19 putts to complete her round Thursday, during which she made eight birdies.
Other than Tseng, the only winners on the LPGA Tour this year have been Jessica Korda and Angela Stanford. Korda shot a 76 Thursday and Stanford was at even-par 72.