North Korea has celebrated the completion of leader Kim Jong-un’s signature construction project, a new city near the sacred mountain where his family claims its roots, with state media on Tuesday calling it the “epitome of modern civilisation”.

A massive celebration involving fireworks was held at the city near Mount Paektu on Monday, the official KCNA news agency said. Newspaper the Rodong Sinmun, a mouthpiece for the ruling party, ran photos showing Kim smiling as he cut a ribbon at the ceremony, and buildings covered in snow.

Kim Jong-un cuts the ribbon to mark the completion of Samjiyon. Photograph: STR/AFP via Getty Images

The city, named Samjiyon, is envisaged as a “socialist utopia” with new apartments, hotels, a ski resort and commercial, cultural and medical facilities, it reported.

KCNA said it could accommodate 4,000 families and had 380 blocks of public and industrial buildings spanning “hundreds of hectares”.

The city is one of the largest economic initiatives Kim has launched as part of his drive for a self-reliant economy, but its construction was delayed, chiefly by shortages in construction materials and labour as a result of international sanctions imposed to curb Pyongyang’s nuclear programme.

On Tuesday Pyongyang warned again that its year-end deadline for the US to change its “hostile policies” was approaching and said it was up to Washington to decide what “Christmas gift” comes at the end of the year.

Ri Thae Song, North Korea’s vice minister of foreign affairs in charge of US relations, said Washington’s call for more talks was “nothing but a foolish trick hatched to keep the DPRK bound to dialogue and use it in favour of the political situation and election in the US”, according to state news agency KCNA reported.

“The DPRK has done its utmost with maximum perseverance not to backtrack from the important steps it has taken on its own initiative,” Ri said. “What is left to be done now is the US option and it is entirely up to the US what Christmas gift it will select to get.”

Skiers watch the fireworks during the opening ceremony in Samjiyon. Photograph: STR/AFP via Getty Images

The delays in building Samjiyon prompted the Kim regime to mobilise youth labour brigades, which defectors and human rights activists have likened to “slave labour” because they receive no pay, poor food and are forced to work more than 12 hours a day for up to 10 years in return for a better chance of entering a university or joining the all powerful Workers’ party.