Zhao, playing as an amateur as he continues his comeback after a 20-month ban for involvement in a betting scandal, came through four rounds of qualifying.
He also produced a stunning display to thrash O’Sullivan 17-7 with a session to spare in his semi-final.
On Sunday, Zhao, the 2021 UK Championship winner, started in commanding style by taking each of the first three frames, including two century breaks.
Williams reduced fellow left-hander Zhao’s lead to 3-1.
After the mid-session interval, Zhao, only the second player from China to reach the world final after Ding Junhui, restored his three-frame advantage with a break of 57.
Williams found some form with a break of 61, only to misjudge a cannon off a black with the frame at his mercy. He was then unable to make a fine cut on the red and Zhao cleaned up.
Zhao wrapped up the first session in style, making a break of 104 before a superb plant on a red led to a contribution of 83 that put him six frames ahead.
Williams won Sunday evening’s opening two frames.
