Meet the hedge fund manager rooting for Elizabeth Warren in 2020

New York(CNN Business) Hedge fund manager Kyle Bass is no fan of Elizabeth Warren's populist platform. He calls her proposed wealth tax unconstitutional. Still, he's hoping she is the Democrats' presidential nominee and wins the White House in 2020.

Bass, founder of Hayman Capital Management, told CNN Business in an interview this week that he would "immediately" vote for Warren because of her tough stance on China's human rights and trade record.

"Warren would be a problem for China," said Bass, who is a longtime vocal critic of China.

More than some of her rivals, Warren has called out China's environmental, currency and labor policies. Bass credited her for signing a letter in April that urged President Donald Trump to punish Chinese officials overseeing human rights abuses in Xinjiang.

"She's the most competent candidate that has the best ability to develop practices for US national security over time," Bass said.

Although he supports Trump's trade agenda, Bass suggested he's not a fan of the way the president acts. "We all would like to see real decorum and statesmanship in the office of the presidency," he said.

That doesn't mean the hedge fund manager is a fan of Warren's platform.

The Democrat has proposed a new tax on Americans with assets of $50 million or more as part of a plan to reverse wealth inequality.

"I have a real problem with the net worth tax," Bass said, adding that he believes it's "unconstitutional."

Bass has previously donated to both Republicans and Democrats, including Senators Ted Cruz and Mark Warner, according to OpenSecrets.

He voted for Hillary Clinton in 2016, calling her the "best of the bad choices."

Bass fears that other than Warren, the Democrats running for the White House would be too soft on China.

"Joe Biden would be the single worst person we could put in the seat in terms of China policy," Bass said. Biden's campaign did not respond to a request for comment.

Biden has supported free trade policies throughout his political career. But last month, Biden sharpened his rhetoric against China, calling for the United States to "get tough on China" to stop the country's "abusive" economic policies.

Trade war heats up

The US-China trade war has drastically intensified in recent days.

Trump spooked investors on August 1 by announcing plans to impose a 10% tariff on $300 billion of imports from China. The tariffs will for the first time directly affect a broad range of consumer goods, including smartphones, tablets, sneakers and even toys.

Although Bass called Trump a "circus clown" in 2016, he defended the president's trade policy and pushed back against the idea that the administration started the trade war.

"China has been fighting since 2001," Bass said, referring to the year China entered the World Trade Organization. "We haven't fought back. This is the first time."

Is China a currency manipulator?

China further rattled markets on Monday by allowing its currency to sharply lose value against the US dollar, raising the specter of a full-blown currency war. The Trump administration then labeled China a currency manipulator.

The People's Bank of China responded by denying it's manipulating the yuan and saying it does not use the exchange rate as a tool to deal with trade disputes.

Although a currency manipulator typically refers to a nation that intentionally weakens its currency to boost exports, Bass stressed the opposite is true with China. It's working tirelessly to support, not devalue, its currency and closely regulates Chinese investment outside the country.

"China works hard, day in and day out, to prop up its currency," he said. "If they let their currency free float and allowed all the Chinese millionaires and billionaires to invest elsewhere, their currency would collapse."

He predicted the yuan would plunge by 40% against the US dollar if Beijing stopped supporting it.

Bass said his hedge fund does not have any positions in China. He told Bloomberg News in May that his firm exited a short position against the yuan.

Such a dramatic devaluation would cause an exodus of capital from China and make it very difficult for the country to pay back dollar-based debt.

"It would be a traditional emerging markets crisis. They would blow up," said Bass.

China's central bank has eased fears of a sharp devaluation in recent days by only allowing the yuan to weaken just gradually.

Standoff in Hong Kong

Bass urged investors to keep a careful eye on the situation in Hong Kong, where pro-democracy protests have intensified.

"It's an existential threat to China. It boils their blood," Bass said.

He predicted China's People Liberation Army or People's Armed Police will eventually be ordered to put down the brewing rebellion.

"It's going to be bloody and brutal. The people of Hong Kong are going to suffer," Bass said.

Such a move could backfire by slamming Hong Kong's economy, real estate market and stock market. It could also trigger more tariffs from the United States.

"If China moves aggressively to quash the pro-democracy movement in Hong Kong, much of the West would have to respond in a way that makes it clear that China is crossing too many lines," said Ed Yardeni, president of investment advisory Yardeni Research.

Bass, who has been critical of China for several years, said he was advised in 2016 by members of the US government to avoid going to China.

"I was told that I shouldn't travel to China again," he said. "That's fine with me."