SHENZHEN, CHINA (REUTERS).-In a dingy studio flat in southern China, a half-naked painter dabs his brush gently over a portrait of Fu Yunsheng, a land official in northern China sentenced to death for embezzling millions.

Squatting while dragging silently on a cigarette, the artist finishes the stark, smiling portrait rendered in the reddish-pink hue of China's 100 yuan banknotes, before stapling it to a wall beside six other portraits of disgraced officials including the toppled former mayor of the southern boomtown of Shenzhen, Xu Zongheng.

"I'm a little bit afraid," said the artist, surnamed Tang, of his participation in the daring but as yet underground art project to paint several thousand portraits of government officials prosecuted for graft in recent years.

The stark, monochromatic portraits, painted by a team of artists in Shenzhen's Dafen village -- known for its mass-produced knock-offs of iconic Western paintings -- are the brainchild of outspoken artist and film-maker Zhang Bingjian.

"I was shocked," said Zhang, who based the concept on the wall-lined portraits of basketball legends in the NBA Hall of Fame in the United States, and has seen the number of portraits of jailed officials steadily climb to over one thousand.

"I never thought there could be that many corrupt officials in China."

He has collected the names of more than 2,500 officials.

Through the years, China's leaders have repeatedly cautioned of the risks of endemic graft, including a sharp warning from Premier Wen Jiabao that a yawning wealth gap and graft could stoke public discontent at a time of rising inflation.

"I take the view that at present, corruption poses the biggest danger," Wen said in March, while underscoring a need for carefully controlled political reforms.

Yet the stranglehold on power by Communist Party officials, particularly at a local level, and the lack of an independent judiciary and free media, have severely hampered efforts to clean up governance as China's booming economy and ultra-capitalist impulses present ever greater opportunities for graft.

Despite an ongoing crackdown on Chinese dissidents, rights lawyers and activists including the prominent artist Ai Weiwei in recent months, Zhang is confident he'll soon secure a private exhibition venue for his project, with the approval of China's censors.

"You can't treat this (corruption issue) with an ostrich mentality, to just stick your head in the ground and stick your behind in the air," the crew-cut Zhang told Reuters.

"Art should engage in social reform. Art isn't an ivory tower. It's not just for making money or a market for collectors. Art should present a certain voice."

For now, however, a deep seam of public disdain and fear lingers toward China's underbelly of officialdom.

"These officials live in a dark world," added Tang, the artist, who lives hand to mouth and sleeps on a sheet-less mattress in the dingy studio.

"I have no inspiration. This (work) is just for survival."

Anti-corruption group Transparency International now ranks China 78th out of 178 countries in its corruption perception index, worse than countries like Romania, Turkey and Rwanda.

Zhang has pledged to preserve the "Hall of Fame" rogue's gallery as a living art installation, to swell or ebb through the years.

"It can grow bigger or it can grow smaller. It depends on what the future looks like," said Zhang.

"The day that this artwork is finished is the day that we have no more corrupt officials."

(Editing by Elaine Lies)

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