Chinese Premier Li Keqiang, in Switzerland to sign the accord, said the trade pact "has huge meaning for global free-trade."
"This free-trade deal is the first between China and a continental European economy, and the first with one of the 20 leading economies of the globe," Li told reporters.
The agreement, which needs to be ratified by the Swiss parliament to become law, is a "real milestone," Swiss President Ueli Maurer said.
Switzerland is China's third-largest trading partner after the United States and the European Union, the BBC reported Saturday.
Watch makers in Switzerland expect import duties to drop from 16 percent to 12 percent, the BBC said.
Switzerland also exports machinery, medicines and agricultural products to China, which exports textiles and agricultural products to Switzerland.