Li, who beat top-seeded Nicole Vaidisova of the Czech Republic in straight sets in the quarterfinals, will play Victoria Azarenka of Belarus in the final Saturday at Royal Pines. Azarenka beat fifth-seeded Shahar Peer of Israel 6-4, 6-2 in the other semifinal.
The 25-year-old Li is on a comeback after missing the second half of last year with a rib injury.
"I want to be in the top 10," said Li, who was ranked 29th at the start of the tournament. "I feel stronger mentally. A new Li Na has come back. I feel fresh."
Schnyder said Li had the talent to break into the top 10, but it depended on the health of her 143-pound body.
Li hobbled into the media conference room Friday, her swollen right knee strapped with ice.
"I just hope she can stay healthy for one year because she always has problems with her body," Schnyder said. "She's a really dangerous player. Even if she misses two in a row, she sticks to her game plan and makes it really tough."
There were nine breaks of serve out of 12 games in the third set, and Li broke Schnyder to lead 6-5 before closing out the match.
"I felt slow on the court and I was reacting late," said Schnyder, who will skip Australian Open leadup tournaments in Sydney and Hobart next week to practice in Melbourne.
Li is playing for the first time since late June in Birmingham, England.
Coached by her husband Jiang Shan, Li reached a career-high ranking of 16 in January last year after making the semifinals in Sydney and then reaching the fourth round of the Australian Open.