This paper intends to examine the impacts caused by the ruling of the Permanent Court of Arbitration on the situations in the South China Sea and regional politics. It explores international arbitration results, international reactions, and the latest developments in the South China Sea. The paper argues that the United States and international community have been very cautious on handling South China Sea issues so as to avert an overall confrontation with China. The first priority has been given to prevent armed clashes rather than to resolve the disputes. Under this circumstance, China will use the opportunities to enhance maritime patrols, build artificial islands, and deploy military hardware in the South China Sea, with the aim to shape a new status quo in China's favor.