Li was born in 1950 in Lianshui County, Huai'an city, Jiangsu province, to Li Gancheng (), a Communist Party official and later vice mayor of Shanghai, and Lü Jiying (), a Communist revolutionary from Shuyang County in northern Jiangsu province. He was the fourth son among their seven children and was named "Yuanchao" () after the "campaign to aid North Korea." Later in life, he would change the characters of this name to 源潮 while maintaining the pronunciation Yuanchao. Li attended Shanghai High School in Shanghai, where he graduated in 1966, shortly prior to the Cultural Revolution. During the Cultural Revolution, he worked in Dafeng County, Jiangsu, performing manual labour.