Large shareholders holding reduction includes: 1. holding reduction before private placement；2. holding reduction in the process of private placement；3. holding reduction after the private placement. This paper examines tunneling behaviors in large shareholders holding reduction and private placement. The results from our sample show that:（1）the lower discounts in private placements if large shareholders sell their stock after private placements, but higher discounts in private placements if large shareholders sell their stock before and in private placements;（2）there are better long term market reaction in the process of private placements if large shareholders sell their stock before and in private placements, and there are better long term market reaction after the private placements announcement date if large shareholders sell their stock after private placements;（3）there are highest arbitrage profit if large shareholders sell their stock after private placements. This paper explains the new mode of tunneling that large shareholders sell stock in high price and issue in low price. The results suggest that large shareholders expropriate minority shareholders by information announcements and earnings manipulation during their holding reduction and private placement.