Always a tough match for either Tsung or Kitana. Read on...
KITANA
IAFs really help in this match. I hardly lose this one anymore unless lag screws me out of IAFs. If Shang wants to spam from afar, just sit in crouch and time your IAF throws- you will hit him but won't get hit by his skull(s). While you're sitting in crotch, most Shangs then think you're about to IAF throw, and they jump at you. That's when you IAF raise and do her 50% combo. Up close Kitana has the edge because her sweep is much longer. I'd say CQC they are very even. Square wave is good but better time it right or you can get caught on a 3 set of skulls on the way up (or down). If Shang is keeping distance, and you can't IAF, then you have no choice other than to 1) jump at him or 2) duck and wait for him to advance/morph. Jumping at Shang is very risky as his skulls are bigger than they seem, so time it with precision.
SHANG
Playing from a distance and skull spamming is a good way to shut Kitana down, but you won't make any new friends. Gauge the level of your opponent's Kitana. If she's can IAF, be cautious. But otherwise definitely sneak in some jump kicks, and try to pressure her up close. His hop kick is extremely quick and effective. Uppercut her anytime she square waves from afar. His HK is also a great anti-air weapon vs her. Morph if you feel more comfortable vs Kitana with a different character. If Kitana is staying away, a quick morph into Jax will get her jumping all over the place. Mileena and Kang, if used properly, can shut her down even more than Tsung can.
Shang, as always, has a toolbox full of options here. The mere fact he can be Mileena the entire match, in my mind, gives him the edge. But with IAFs, Kitana really evens it out.
A 5-5 match-up.