Cage just can't get any love around here, I tell ya...
Shang Tsung can own Cage from anywhere on screen since Cage lacks a decent zoning game and cannot fly or teleport away from skull spam. Skulls are a good bet for success, just make sure you are doing it from full screen as opposed to mid. Cage can still close the gap with a well-timed shadow kick. Up close Shang needs to be a little more cautious, but again CQC is great for Shang. Apply jab pressure and crossovers when possible. Do not give Cage the opportunity to aa or shadow kick, because he will. You can always morph, but it shouldn't be necessary.
Cage needs to stay in close where he does his best work. AA anytime Shang is in the air, pick whatever option works best. Toss a green ball out every now and then to break Shang's fireball spam, but always move toward him. When in close, try for crossover, shadow kick combos. Ballbreakers work pretty well too, but don't abuse it or you'll be blue-balled yourself.
Tough matchup for Cage (like most matches.) I'd say 7-3, Shang.