Lao-Tsing was a captain in the Kuomintang, the Chinese army led by Chiang Kai-Shek. He was present during the military takeover of U Paw's province, when its resources were appropriated for the Kuomintang.
In 1938, he was leading a unit of blue-uniformed Kuomintang forces on a train in the Szechwan region, when U Paw stopped the train. Hoping to put an end to her bandit army, he met with her at gunpoint and hoped to take her and her forces, including Indiana Jones as prisoners. Undaunted, she shot Lao-Tsing in the head, killing him, and her forces opened fire on his men, who quickly surrendered to her. 
- Indiana Jones: Thunder in the Orient (First appearance)