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Badosa, who was as low as 140th in the world rankings in May, came into the semi-final meeting on a good run of form in Beijing which included victory over second seed and US Open finalist Jessica Pegula in the last 16.
And she took advantage of Gauff’s inconsistencies, particularly on her serve which produced 11 double faults, to win the opening set and break in the first game of the second.
Gauff is working with new coach Matt Daly after ending her partnership with Brad Gilbert last month following her fourth-round exit at the US Open, where she was defending her title.
She saved four break points to avoid going 4-1 down in the second set and from then the momentum was with the American, who regained her composure as Badosa dropped her first set of the week.
Gauff broke three times in the decider to seal the win as she bids to add to her only title of the year so far from Auckland in January.
“I tried to stay focused, it was tough but mentally I just tried to reset,” she said.