Starting in third place in a 12-horse jump-off, Wathelet knew he had to gamble if he wanted to have a shot at winning.
"I knew I had to take all the risks and she jumped amazing," Wathelet said after clinching the jump-off on his 12-year-old grey Westphalian mare, Coree, with a clear round in 37.91 seconds.
Britain's Ben Maher and Explosion W finished second in 38.55 seconds, followed by Germany's Daniel Beusser with Tobago Z in 39.11 seconds, in front of a fashionable sellout crowd at the China Art Palace.
Head-to-head television pictures showing both Maher and Wathelet's rounds showed the 37-year-old Belgian took the lead with a sharp, short turn into the third fence.
"The turn to No. 3, I had a really good turn," said Wathelet, who started riding on his father's farm when he was eight years old.
Although he competed in his first regional show at the age of 16, he initially didn't want to take up riding professionally because he thought it would be too expensive. After it proved too hard to combine school with competing, he decided to give full-time riding a go when he 19, and has never looked back.
Wathelet's previous victory on the LGCT came at Chantilly in 2015 with Conrad de Hus.
His victory in Shanghai has earned him a spot in the inaugural Longines Global Champions Super Grand Prix, which will see the winners of each Tour leg competing against each other in Prague in December.
The lone Asian stop of the 16-leg LGCT also marked the return to competition of defending overall champion Harrie Smolders and his stallion Don VHP Z.
It was solid start for the Dutchman, who finished sixth in the jump-off, almost two seconds slower than Wathelet as he took no risk with his tall stallion.
After events in Mexico City, Miami Beach and Shanghai, Britain's Scott Brash is leading the overall standings with 99 points, while Edwina Tops-Alexander of Australia and Deusser are both lying in second place with 72 points.
Brash and Tops-Alexander are both trying to become the first rider to win the overall title three times.
London Knights win team event
The third leg of the team competition was a nail-biter, with British riders Emily Moffitt and Ben Maher claiming the first win for London Knights by the tiniest of margins.
The Knights, who had been in the lead after the first round earlier in the week, won the Global Champions League event by 27 hundredths of a second ahead of Simon Delestre and Jerome Guery of the Monaco Aces. Roger-Yves Bost and Dayro Arroyave of the Chantilly Pegasus finished in third place.
"I'm feeling pretty awesome," Under-25 rider Moffit told the GCL website. "It's my first GCL this year and it's really exciting. I think it's even better as I'm [in a team] with my trainer, which brings extra excitement. The U25 riders are not expected to win, so this is really cool!"
Maher, who brought home the win as he raced across the finish line with his chestnut Explosion W, said: "We had a lead from round one -- I knew we had to jump clear and we managed to do it today."
Their win in Shanghai also handed the London Knights the joint lead in the overall standings alongside Valkenswaard United, with both teams tied at 62 points. Prague Lions are third with 52 points.
Asked about the inaugural $3 million GC Prague Play Offs in December, Maher said: "the prize money is huge this year, and there are a lot of good riders and horses, so we're trying to keep up with our ranking -- it's very important for us to make it to Prague."
He added: "It's a long season -- we have great horses, Emily is riding amazing so hopefully we have a good season."
After the first three legs took place in North America and Asia, the Global Champions circuit moves to Europe next month. The first of 12 European events will be hosted by Madrid between May 4 and 6. Other stops along the way include Paris, Monaco, Cannes, London and Rome.