Coric, who knocked out Juan Martin del Potro and Roger Federer en route to his first ATP Masters series final, matched Djokovic in the early exchanges as the two players traded blow-for-blow on serve.
With the win, Djokovic replaces Roger Federer as world No.2.
Serbia's Djokovic broke the 19th-ranked Coric - his good friend and sometime-training partner - in the sixth game of the first set on the way to another no-nonsense victory.
With victory in sight, Djokovic raised his return game to hold three championship points at 5-3, but Coric showed great character to work his way back.
Djokovic holds an 11-0 overall record in finals played in China, where he also won the Beijing tournament six times and the 2008 year-end Tennis Masters Cup held in Shanghai.
"Maybe I was Chinese in the past life", said Djokovic, smiling, in explaining impressive record in the country.
"This was definitely one of the best service weeks that I've had in my career".More news: U.S. shows double standard on Khasoogi disappearance: Russian envoy
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Previewing the final, Djokovic said: "We can not underestimate Borna". I'm just happy with the whole week.
"I am very close now to Nadal in the rankings and put myself in a good position for the last period of the year".
The 32-year-old Nadal could return from his latest injury for the Paris Masters, which starts at the end of this month.
He has been particularly dominant on his serve and did not drop a single service game in Shanghai.
The Serbian former World No 1 continued his scintillating form in 2018, having emerged victorious in two Grand Slams (Wimbledon, US Open) and the Cincinnati Masters, in Shanghai to stretch his winning run to 18 games.
"Obviously the last three, four months have been terrific for me", Djokovic said. "Not many holes in the game in general, especially this week".
"I had a really good offseason and the longest offseason so far". Emotionally they helped me a lot when I had the surgery.
He would have to reach the final - playing five matches - at either tournament to overhaul his 215-point deficit to Nadal.