This paper investigates tunneling and propping between Chinese listed firms and their relevant parties from 2001 to 2005. Evidence from our research shows that controlling shareholders engage in tunneling and propping through related lending, although tunneling lending exceeds propping lending in both frequency and magnitude. Pyramidal controlling ownership structures increase the level of tunneling lending, while the presence of large, non-controlling shareholders resists tunneling lending. Controlling owners tend to divert fewer funds when firms have better investment opportunities. State ownership was not found to be detrimental to firms, contradicting some previous research. A high debt ratio is likely to be concomitant with tunneling lending. Firms in financial distress have experienced either more tunneling lending or more propping lending with controlling shareholders.