During the Second Sino-Japanese War, Li, as chief engineer, established the first airplane factory in China – the Dading Airplane Factory (大定飛機製造廠) in Dading, current Guizhou Province, Southwestern China. Li also led the building of the first Chinese indigenous aircraft engine.
Li participated in the examination for the Boxer Rebellion Indemnity Scholarship Program, and obtained the same score as Qian Xuesen. However, there was only one scholarship awardee and Qian published two or three more articles than Li, so Qian was preferred.[4] Nevertheless, Li went to study in the United States and received master and doctor's degrees from the Massachusetts Institute of Technology. At MIT, Li co-founded the Man-Vehicle Laboratory. Li was also the director of the MIT innovation center. In 1951, Li collaborated with Charles Stark Draper and published an article on optimal control, which opened a new field of automation.
Li founded several companies including Dynisco, Setra Systems (co-founded with his brother S. Y. Lee), and Y.T.Li Engineering. Li is also an inventor and has been granted more than 60 US patents.[5]
In 1987 Li was elected a member of the United States National Academy of Engineering for "his contributions to innovation in instrumentation, control, and to engineering education'".[6] From 1980 to 1984, Li was the President of the Chinese American Association.