China ended a 1-1 draw in Hong Kong with a 4-3 penalty shootout defeat at the start of the Lunar New Year.
A Hong Kong League team will now meet Honduras in Friday's Carlsberg Cup final after the South American team hammered Slovenia 5-1.
At least China will face fellow World Cup qualifiers Slovenia in the game for third place but they struggled for long periods to find any form against the Hong Kong side which rarely plays together.
Yu Gen Wei gave China a 25th minute lead when Li Yi's header came back off the cross bar and he struck in the rebound from close range.
Brazilian striker Filho equalised five minutes later with a low drive allowing goalkeeper Chan Ka-ki to set up the win for Hong Kong by saving Li Yi's fifth penalty kick.
Filho then scored himself from the spot to clinch victory.
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