Billionaire investor George Soros told the World Bank this week that the planet is on the verge of a third world war that could arise out of an economic collapse in China.

"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," Soros said during a Bretton Woods conference.

The billionaire warned that China's difficulty in transitioning from an export economy to a domestic demand-led system could force Beijing to whip up a conflict with an external enemy in a bid to keep the country from collapsing.

Soros said the only solution to the prospect was to allow China to join the IMF's basket of global currencies so that it could compete with the dollar.

Without this measure, Soros warned that, "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."