The 22-year-old broke his personal best by scoring 103.13 points, ahead of local favourite and current world bronze medallist Jin Boyang and two-time world champion Javier Fernandez of Spain.
Kolyada's performance to Mozart's piano concerto No. 23 was highlighted by a quadruple lutz, quad toe-triple toe, triple axel and two level-four spins. However, he faltered on his camel spin.
Jin came second with a score of 93.89 while five-time European champion Fernandez managed 90.57 to be placed third.
"I did not look so happy at the end of my programme because this is only the short programme and everything will be decided tomorrow (Saturday)," Kolyada told reporters.
"So I did not let my emotions out. Overall, I enjoyed my performance today. The only negative thing was the change foot camel spin – I somehow lost my focus."
China's grand prix event is the third of six qualifying events for the International Skating Union's Grand Prix Final in Japan in December, which will be held two months before the start of the Winter Olympics in Pyeongchang.
Canadian Gabrielle Daleman took a slender lead in the ladies short programme, edging out Japan's Wakaba Higuchi and Elena Radionova of Russia by less than a point in her first grand prix of the season.
The 2017 world bronze medallist performed to Georges Bizet's 'Habanera' and scored a season-best 70.65 points.
Higuchi earned 70.53 points with two-time European silver medallist Radionova scoring 70.48.
In the day's final event, reigning world pairs champions Sui Wenjing and Han Cong of China scored 80.14 points to carve out a sizeable lead in the short programme over compatriots Yu Xiaoyu and Zhang Hao, who scored 71.37.
Two-time world champions Gabriella Papadakis and Guillaume Cizeron of France scored a personal best of 81.10 in the short dance to take a lead of more than eight points over second-placed Madison Chock and Evan Bates of the United States.
(Reporting by Sudipto Ganguly in Mumbai; Editing by Christian Radnedge)
