How could

This is hard to say. Experts are talking about possibilities of economy sanction as the first step of "war". At least the smaller country will be under the pressure. 

There won't be effect on economy at all, it only affects politics and military
It would have some effect on Bitcoin if they declare which could force miners to stopped their activity and people move their assets to bitcoin.

and what's Nanhai arbitration ?  the name sounds very weird as seems to make some thing bad. 

I think the event will have minimal effect on global or regional economy. This is not a sudden or short term event- it has been around for ages.

Unless there is any actual war happening, my guess the situation is status quo.