But the shuttler looked far from his best against Lu, who occupied the final automatic berth to the season finale.
Despite taking the first game, Lee was full of errors and his day was made more miserable as he required treatment on his right finger midway through the second game.
Lu sealed that game 21-16 to force a decider, which Lee seemed to struggle as the match wore on.
That right finger once again required treatment, and it clearly affected him further as unforced errors continued to pile up.
The world number two eventually surrendered after 70 minutes to mark the end of his 2022 season.
Lee Zii Jia in Australian Open
Soong Joo Ven also followed Lee out the door after losing to Indonesian qualifier Ikhsan Leonardo 21-15, 18-21, 12-21.
Ng Tze Yong, meanwhile, kept the national flag in the men’s singles flying with a resilient 21-16, 19-21, 21-5 over South Korea’s Heo Kwang Hee.
Ng should fancy his chances against Australian Nathan Tang in the last eight.
Goh Jin Wei was also impressive in the women’s singles after she downed Anwesha Gowda 21-7, 21-13 and next plays third seeded Pornpawee Chochuwong for a place in the semi-finals next.