Most existing micro‐level empirical analyses of corruption rely on administrative records, special‐purpose surveys or field experiments, which can be difficult or very costly to obtain in some situations. In this paper, we apply an expenditure‐based method of quantifying the extent of corruption in a particular country using household survey data. This method utilizes discrepancies between consumption and reported income to measure corruption. Another contribution of this paper is that it provides the first objective estimate of the extent of corruption in China. We use a quadratic clothing expenditure function to estimate the extent of corruption in China in 2002.