The escalation of tensions with China over the COVID-19 pandemic could be a serious risk' for economic recovery - and even lead to the worst trade war that erupted between Beijing and Washington, David Sokulsky, CEO and chief investment officer of Concentrated Leaders Fund told CNBC.

According to him, the recovery of the economy after several weeks of quarantine may be frustrated due to political tension

“That’s a major risk which isn’t being priced in at the moment,” he said. “As we pass peak infection rates, the politicians are going to want to blame somebody, and the obvious target for that blame is China.”

In March, the global economy almost halted as countries closed their borders and businesses in an attempt to stop the spread of the virus. Some countries have accused China of responding incorrectly to a COVID-19 outbreak and have claimed compensation for the paralyzing effects on their economies. Others have called for an investigation and want to know if China could have prevented the spread of the epidemic. China is a victim, not an accomplice to it,” said Chinese Vice Minister Le Yucheng, according to an official transcript of his interview with NBC News. “It is not a time for accusation and political manipulation,” he added.

The US threatens retaliation against Beijing, while European Commission President Ursula von der Leyen supports calls to investigate the disease.

“If you have a look at the rebound during (the fourth quarter) last year, and during January this year, a lot of that was due to improved trade negotiations and signing of (the) phase one between U.S. and China,” said Sokulsky. 

This time it’s different in that aggravation of tension affects the rest of the world, he noted.

Sokulsky noted the situation could get worse. “We could see a very quick rehashing of the trade wars that we had, but potentially on a much worse scale than what we had last year.”