Kung Lao is a very defensive character that relies heavily on punishment. He has one of the very few low launchers in the game. He has few quick normals that give him many options.
Your main goal with Kung Lao is to land his infinite air combo and you have 3 ways to do that. One way is to mix them up SM:F1 and BS:B3, this is risky however because both moves can be parried. Another way to land his infinite is to punish with his SM:2, if you cancel out of your block at the very first frame you have enough time to punish a good chunk of moves with this. The third way is obviously just to parry then launch afterwards.
Shaolin Fist (SM)
-2 is an amazing move to block cancel out of, if you are quick enough you can catch your opponent out of a jump cancel. If it hits them you get a free F1 launcher
-F1, decent mid launcher, but punishable (like most) by block cancelling. You can use it to mix your opponent up with his other stance's launcher. You can parry shortly after the move is done.
-113cs, comes out pretty quick and can be parry canceled for long range punishes.
-D4, quick low that's safe
-B4, good range and can be parry cancelled. It is pretty unsafe however.
Broadsword (BS)
-B3, a low launcher that is actually punishable if your opponent block cancels quickly. Parry cancel for more range. If the edge of the sword hits, do combo below so your air combo doesn't whiff.
-B3>cs>F1>cs>jump>112113CS4444, the F1 makes the air combo much easier
-F4, semi-safe, decent range. Can be parry cancelled which can be challenging to do at for but it's practical.
-1,1, F3, decent juggle finisher, use this when your opponent is almost dead and you don’t want to risk messing up his infinite. If your execution is good enough, you can use this to extend your air combo in the corner with by jumping out of the very end of the pushback on F3. If timed incorrectly the F3 will whiff, it’s also not too consistent to do in certain stages.
-D2, the preferred unbreakable uppercut, it does more damage than the shaolin fist uppercut. It’s a decent anti-air too.
Air Combat (AC)
-(Broadsword) (air only) 112113CS4444>Jump>repeat, Kung Lao’s main infinite combo, if it is mistimed then usually the 112 part knocks them on the ground. Try not to mash anything in the combo besides 4.
-Don't bother with shaolin fist air combos
Special moves
-db+3, quick but very punishable so don’t use it
-bf+1, It's OKAY, it can crouched and punished by a lot of things. It's only decent at a distance, don't use it at all vs characters like sareena
-du+2, your opponent can crouch this for free, the only follow up after this that can't be crouched is 2, but that's not even a mid.