The two-time major winner, 32, has been sidelined by a knee injury recently, with her last appearance on the WTA Tour at Wimbledon in June.
Her ranking has slipped to sixth, but she was believed to be trying to get fit for a finale in the city of her birth.
Li's retirement, effective immediately, means 17 of the top-20 players on the WTA Tour will be present, with the Chinese, Andrea Petkovic and Venus Williams the only absentees in the top echelon.
Serena Williams will appear for the first time since winning her 18th grand slam, claiming the US Open in emphatic fashion in September.
Williams, 32, won her sixth US Open title, and third in succession, without losing more than three games in any one set.
As is the status quo, she will be the top seed and player to beat in China, although all the top players will now be eyeing off valuable rankings points in the race for a spot at the WTA Tour Championships in Singapore.
In the frame for the eight-player field as it stands are Williams, Maria Sharapova, Simona Halep - the leading trio officially qualified - Agnieszka Radwanska, Petra Kvitova, Li, Eugenie Bouchard and Ana Ivanovic.
Just outside the top bracket are the in-form Caroline Wozniacki, and left-handers Angelique Kerber and Ekaterina Makarova.
Williams is a four-time winner of the Tour Championships, including the past two years, with Kvitova (2011), sister Venus Williams (2008) and Sharapova (2004) the only other active players to have won the 'fifth major'.