Story Highlight
– China’s GDP grew 4.3%, below target and previous quarter.
– Exports surged 27%, highlighting weak domestic demand issues.
– Luxury watch industry faces challenges with declining Chinese sales.
– Rising costs and external uncertainties impact businesses’ performance.
– Consumer recovery remains uneven, affecting luxury goods demand.
Full Story
China’s National Bureau of Statistics has reported a 4.3% growth in gross domestic product (GDP) for the second quarter of 2023, a decline from the 5% growth recorded in the first three months of the year. This latest figure falls short of the government’s annual growth target, which is set between 4.5% and 5%.
The slowdown highlights the growing disparity between a thriving manufacturing sector, evidenced by a 27% year-on-year increase in exports for June, and a lack of robust domestic demand. This scenario poses significant challenges for the luxury watch industry, which has depended heavily on Chinese consumers for expansion over the last decade. Although international tourism is gradually rebounding, domestic spending remains tepid, with consumer confidence continuing to affect discretionary expenditure.
Swiss watchmakers are particularly attentive to these economic data, as many depend on the Chinese market as a crucial source of luxury sales. In a concerning trend, exports of Swiss timepieces to mainland China declined by 12.1% in 2025, contributing to an overall reduction of more than one-third over a two-year period.
The Federation of the Swiss Watch Industry has cautioned that a swift recovery in the Chinese market is unlikely, with diminishing demand impacting production and employment within Switzerland’s watchmaking sector.
This data represents the first complete quarter since the escalation of the conflict in Iran earlier in the year, with rising oil prices placing additional strain on both businesses and consumers in China. The National Bureau of Statistics noted increased external instabilities and uncertainties, alongside a mismatch between solid industrial output and weak domestic consumption.
Fabien Yip, an analyst at investment platform IG, pointed out that Chinese companies are absorbing higher costs due to persistently low demand. “Because demand at the till is too weak to bear it,” she stated.
She warned that the economic situation could grow more difficult if the Iran conflict persists.
Conversely, Julian Evans-Pritchard, who heads the China economics team at Capital Economics, posited that the slowdown could indicate a more realistic perspective on economic conditions rather than a sharp decline in growth. He stated, “This may largely represent a greater willingness to acknowledge pre-existing weakness rather than a sudden deterioration in underlying growth.”
Despite challenges in domestic spending, China’s export market remains robust. Customs data from June reflects strong demand for technology exports, particularly semiconductors essential for artificial intelligence infrastructure.
For luxury watch brands and retailers, these latest figures suggest that the recovery of Chinese consumers is inconsistent, with demand for high-end goods likely to remain a focal point for scrutiny in the months ahead.
