While admitting that reaching agreement between the two countries will be difficult to achieve, George Soros - speaking at The World Banks Bretton Woods conference this week - warned that unless the U.S. makes major concessions and allows Chinas currency to join the IMFs basket of currencies, "there is a real danger China will align itself with Russia politically and militarily, and then the threat of world war becomes real."

Much in global geopolitics depends on the health and trajectory of the Chinese economy, was the undertone of George Soros comments as he spoke this week, but as MarketWatch reports,

Billionaire investor George Soros said flatly that he’s concerned about the possibility of another world war.

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If China’s efforts to transition to a domestic-demand led economy from an export engine falter, there is a “likelihood” that China’s rulers would foster an external conflict to keep the country together and hold on to power.

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To avoid this scenario, Soros called on the U.S. to make a “major concession” and allow China’s currency to join the International Monetary Fund’s basket of currencies. This would make the yuan a potential rival to the dollar as a global reserve currency.

In return, China would have to make similar major concessions to reform its economy, such as accepting the rule of law, Soros said.

Allowing China’s yuan to be a market currency would create “a binding connection” between the two systems.

An agreement along these lines will be difficult to achieve, Soros said, but the alternative is so unpleasant.

“Without it, there is a real danger that China will align itself with Russia politically and militarily, and then the threat of third world war becomes real, so it is worth trying.”

And while on the topic, Soros also spoke recently, as ValueWalk notes, on the situation in Europe...

“The European Union was a very inspiring idea to people like me,” he commented, reflecting back to when EU economies were more balanced. “It was the embodiment of the idea of an open society, like minded countries getting together and sacrificing part of their sovereignty for the common good. It was meant to be a voluntary association of equals.”

Soros continued to say: “Because of the Euro crisis, [the E.U.] has been transformed into something radically different.” He also emphasized that over time two different classes of countries have evolved: creditors and debtors. “The debtors had difficulty meeting their obligations and this put the creditors in charge. They (the creditors) set the rules and made it very difficult for the debtors to exit their inferior status. A voluntary association of equals turned into an involuntary association of un-equals.”

While avoiding making predictions, on Greece Soros noted: “Greece is a poisonous situation. All sides have made a lot of mistakes, and there is a lot of hostility, a lot of negative sentiments…Both sides are willing to hurt the other side even if it hurts them.”

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The billionaire investor concluded by pointing out that military spending is currently on the rise in both Russia and China, warning ominously...

"If there is conflict between China and a military ally of the United States, like Japan, then it is not an exaggeration to say that we are on the threshold of a third world war."