The much-anticipated repeat of last year's final, won by the Belgian in three sets, lived up to the hype as Clijsters battled through to win 4-6 7-6 (8/6) 6-4.
That the match went that far was testament to Clijsters' spirit as a nasty ankle sprain in the seventh game looked as though it could result in a retirement.
The 11th seed, in her final year on tour, carried on but her efforts looked to have been in vain when Li moved 6-2 up in the second set tie-break only to choke horribly when on the cusp of a last-eight slot.
Clijsters took full advantage of her opponent's meltdown to edge the third set, despite some anxious moments, and set up a possible clash with world number one Caroline Wozniacki.
"I knew it was going to be a tough match both physically and mentally but I didn't expect this," she said.
"It is amazing to get through and to fight despite not having my best tennis. You just try to win each point and don't give up."
Asked whether she considered quitting due to the ankle, she said: "Yeah, a couple of times it went through my mind but then I didn't want to quit at my last time at the Australian Open.
"I just kept on fighting and you never know what is going on on the other side of the net."
In a tournament of mis-matches, this always promised to be a classic but the weight of expectation seemed to affect both players early on with four breaks of serve in the opening five games.
Yet the drama was not long in coming as on the fourth point of the seventh game, Clijsters went down clutching her left ankle on the baseline.
The signs did not look good but after a medical time-out during which some heavy strapping was applied she was able to carry on and even win the game.
But with Clijsters' movement restricted Li seized her chance and a break at 4-4 handed her the chance to serve it out.
Another break early in the second strengthened the Chinese's position and she appeared to have control of her emotions when she withstood some heavy Clijsters pressure to go 3-1 up.
But the defending champion was not done and came again to level it at 3-3.
Despite frayed nerves it remained on serve until the tie-break which Li controlled to establish four match points.
Three came and went but on 6-5 it seemed all over when the fifth seed chased down a woeful Clijsters drop shot only to pat the ball tamely back into court, allowing her opponent to execute an inch-perfect lob.
Two points later and Clijsters had levelled the match as Li's game disintegrated.
The third set was a procession for the first four games as Li's focus went AWOL.
But, to her credit, she battled back, reclaiming one of the breaks as Clijsters failed to serve it out at 5-2.
But there was no reprieve second time round as the 28-year-old finally got the job done when Li netted a cross-court backhand.