TAIPEI (Taiwan News) – Russian diamond mining group Alrosa has been deeply affected by the U.S.-China trade war, and its sales in the Chinese market have slumped as a result, the Financial Times reports.

Alrosa CEO Sergei Ivanov explained that the markets for luxury goods, such as diamonds and jewelry, are very sensitive to global political instability. Due to the ongoing trade war with the U.S., Chinese consumers are cutting back their spending on Western products.

“We thought [our sales growth] in China would go up by 2 or 3 percent, but now the outlook is likely more pessimistic — growth rates will either be neutral or slightly negative,” the Financial Times quoted Ivanov as saying. In fact, Alrosa’s sales in the first quarter of 2019 dropped 38 percent, and the outlook remains pessimistic for the rest of the year.

Despite the setback, Ivanov still backs the strategy of entering China, which, along with India, is expected to drive growth in the diamond market with its burgeoning middle class. “In the end, Christmas in the US and Chinese New Year in February aren’t going anywhere. There’ll be good demand and the market will normalize,” he told the news agency.