One of China’s richest men has revealed an attempt to sue a municipal government for Rmb4bn ($640m) over a suspended project to build a new city, the biggest case of its kind brought by an entrepreneur against the state.

Yan Jiehe said the company he founded, China Pacific Construction Group, had not been paid for its work on Lanzhou New City, a settlement once billed as “Las Vegas in the Gobi”, where diggers flattened dozens of hills before officials suspended the project in 2013.

The lawsuit, which Mr Yan said was accepted by a local court in 2015, highlights risks to infrastructure and real estate companies as Beijing curbs wasteful infrastructure projects to reduce local government debt. The most prominent victim to date was a $4.6bn subway project in Inner Mongolia, axed last year.