Chung Hong was Grandpa Hong's uncle, paid by Wah Sing Ku to make fake money to pay for the release of the Four Fathers. He is killed by Ku (off screen) after the fake money were completed because he had outlived his usefulness.
Chung had paid Uncle Benny Chan to get the rest of the Hongs, his family, out of China and into the United States while he was making counterfeit money for them at their request. Little did he know, they were being held as slaves on a cargo ship.
Once they were released, and were given hospitality by Roger Murtaugh, Grandpa Hong kept in touch with him through writing letters. Of course, that's what gave Ku and the Triads the address, giving them the opportunity to kidnap the Hongs to get him to do the job.
Sometime later, after Riggs, Murtaugh, and Butters found where the Hongs were, he was then seen hugging his nephew Hong to see he was okay. He asks Ku to take him and the rest of the family to their new homes, and he'd finish the job. An enraged Ku snapped Hong's neck killing him and threatened to murder the rest of the family if he didn't cooperate. Even after Chung finished the job, Ku killed him because he had outlived his usefulness and he also was a liability. His body was then discovered, alongside by Hong and Uncle Benny when Riggs, Murtaugh, Butters, Ng, and some other detectives came to the scene of the crime and discovered the counterfeiting operation.