He entered a local high school with Yang Kaihui, wife of Chinese Communist leader Mao Zedong.

Some of his famous classmates included Chen Cheng, Xue Yue, Fan Hanjie, Dai Li, Hu Zongnan, Qiu Qingquan, Du Yuming, Zhang Lingfu, Hu Lien, Liu Yuzhang, Huang Wei, Li Mi, Wang Yaowu and Lin Biao.

He returned home in the same year and was promoted as company commander of the Cavalry unit of the Whampoa Military Academy with the rank of major.

He wrote a letter to President Chiang Kai-shek, suggesting making drastic changes in the National Revolutionary Army and build a modern armored unit.

In April 1945 General Liao's New 6th Army flew home for the first time in 3 years and decisively defeated the Japanese forces in the Battle of West Hunan, the deputy leader of the National War Council General He Yingqin decorated him with the Order of Blue Sky and White Sun, the highest honor a Chinese commander can achieve.

General Liao suggested to Nationalist High Command the 9th Army Group must retreat to Yingkou, a nationalist-held seaport and leave Manchuria via sea.

Finally General Du Yuming persuaded Chiang Kai-shek to allow the 9th Army Group to retreat to North China, but they were unable to break through the PLA defensive line around Heishan (黑山) and Dahushan (大虎山), and lost a considerable amount of time.

During a surprise night raid, one communist unit destroyed General Liao's Army Group Headquarters, as a result, his entire command structure was disrupted.

After his capture, General Liao was held as a prisoner in Beijing's war criminal camp with his former commander Du Yuming until his pardon in 1961.

In 1968, Liao was forced into a struggle session by the Red Guards at the height of the Cultural Revolution, he died of a heart attack at the scene at age 62.