The decision was made through a vote at a bimonthly session of the National People's Congress (NPC) Standing Committee that concluded on Friday.
Li, 66, served as minister of transport and the ministry's Communist Party of China (CPC) chief from December 2005 to July 2012, when he was removed from his post.
Yang, 58, has served as the ministry's Party chief since July. He served as the Party chief of the Tibet autonomous region from December 2004 to May 2006.