Too bad Kyle Bass closed his yuan short earlier this year. If he had held that position, he would have made a killing on Monday, when the Chinese currency broke below 7 to the dollar and continued to tumble as the currency war between the world's two largest economies officially began.

Though Bass insists that the HKD, against which he has taken a large position betting that its more than 30-year-old peg against the dollar will soon break, won't be far behind the yuan now that Beijing has seemingly stopped supporting the formerly tightly controlled yuan, the hedge fund manager, who still probably profited off his short positions against the currencies of several regional rivals, appeared on CNBC's "the Closing Bell' Monday afternoon to talk China.

Inviting Bass to speak made sense: He's established himself as one of the most prominent China bears in the West, even joining with Steve Bannon to warn investors and ordinary people of the dangers of China's constant manipulation of the US. And during Friday's interview, which came as US stocks locked in their worst daily performance of the year, Bass explained how the yuan could sink another 30% or 40% if Beijing completely abandons supporting it.

As Bass explained, President Trump's claim that Beijing manipulates its currency is accurate.

"What’s happening in China is they have to have dollars to sell to buy their own currency to hold it up. If they were to ever free float their currency, I think it would drop 30% or 40%," Bass told CNBC’s "Closing Bell." "And the reason is they claim to be 15% of global GDP in dollar terms, but less than 1% of global transactions settled in their own currency," Bass added. "And so, they prop their currency up...everyone calling them a currency manipulator – they are trying to hold this whole thing together."

For the first time since 2008, the exchange rate for China's onshore yuan sunk below 7 to the dollar on Monday. Pressure on the yuan started last week after President Trump said he would slap tariffs on another ~$300 billion of Chinese imports. It accelerated on Monday when Beijing announced that it would cancel agricultural purchases promised as part of the latest trade war detente.

Bass has warned American corporations not to pressure the Trump Administration to strike a deal with China. He added that Beijing has a history of never living up to its promises re: trade since joining the WTO since 2001.

“Every deal that the Chinese have signed up with us since their inception into the WTO since 2001, China never lives up to their promises,” he said on July 25. “At some point in time, one of our administrative officials is going to hold their feet to the fire and this is kind of a battle of cultures because the Communist Party doesn’t want to submit themselves to anything measurable or enforceable.”

"If the Chinese run out of dollars, they need dollars to buy everything that they import..." Bass said.

He then referenced South Korea back in the 90s during the runup to the Asian currency crisis: South Korea infamously kept USD on its balance sheet after loaning them out to their banks, making their pile of dollar FX reserves an illusion.

Something similar is happening now with China, Bass said.

Watch Bass's full interview below: