Sen. Elizabeth Warren is positioning herself to be tougher on China that President Donald Trump, former White House chief strategist Steve Bannon told CNBC on Friday.

"She's trying to get to the right of President Trump," said Bannon, who helped Trump win the White House in 2016 and influenced the early months of the administration.

"If you look at Elizabeth Warren, some of the Democrats, they're trying to get to the right of Trump on China."

Warren in late July released what she called an "economic patriotism" agenda, which outlined her approach on China. "We've let China get away with the suppression of pay and labor rights, poor environmental protections, and years of currency manipulation," Warren wrote in her blog post.

Bannon, who formerly ran the Breitbart News far-right media outlet, has said a key focus in the presidential election will be China. Candidates who pressure Beijing and show they can navigate a trade deal between the world's two largest economies will do better, the longtime critic of China added.

Warren is the only viable Democratic candidate in play who is willing and able to take on China, Bannon said in the interview on "Squawk Box," arguing that former Vice President Joe Biden's campaign is on the decline.

Extreme talk from Warren on China, coupled with her wealth-taxing proposals, could well lead to a centrist challenger joining the race, Bannon speculated. He reiterated his belief that Hillary Clinton or former New York City mayor and billionaire businessman Mike Bloomberg will challenge Warren. Bloomberg and Clinton have repeatedly said they do not plan on launching 2020 campaigns.

Bannon predicted Biden, who has seen his frontrunner status dwindle as Warren surges, will drop out of the race by the end of the year.

Reacting to Bannon's remarks, Biden spokesman Andrew Bates wrote to CNBC by email: "When the festering underbelly of the alt-right is threatened by you, you know you're standing up for our best values."

"Donald Trump's presidency is in a tailspin because of actively seeking foreign interventions in American democracy," Bates also wrote, referring the House Democrats' impeachment inquiry that centers on whether the president sought help from a foreign power to damage Biden.