George Soros, billionaire and founder of Soros Fund Management LLC, looks on during an interview at the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 21, 2016.

Liberal billionaire George Soros on Thursday warned that the U.S. and China, the world's two largest economies, are locked in a "cold war that could soon turn into a hot one."

His comments come at a time when investors are increasingly concerned about a serious economic downturn, with a long-running U.S.-China trade war souring business and consumer sentiment.

Referencing Trump's decision to label China as a "strategic" competitor in late 2017, Soros said this approach was "too simplistic."

"An effective policy towards China can't be reduced to a slogan. It needs to be far more sophisticated, detailed and practical; and it must include an American economic response to the Belt and Road Initiative," he said.

Soros, a major Democratic donor and critic of President Donald Trump, was speaking at a private dinner at the World Economic Forum (WEF) in Davos, Switzerland.