Aside from the potential military threat, there is also growing speculation around whether China will lash out against international partners by depriving them of the economic benefits they get from doing business in China.
However, most experts who spoke to CNBC said the world's second-largest economy will not allow this particular geopolitical event to impede its economic goals.
"While it is embarrassing for President Xi's regime, domestic considerations such as the state of the economy are more important to ordinary Chinese," said Muller.
NSBO Bank, a think tank in Beijing, agrees: "If the Chinese use economic policy to protest this ruling, it would be very strange. I don't think they would do it because it wouldn't be productive," said Duncan Wrigley, who specializes in Chinese macro research at NSBO.
Ambassador Keith pointed out that there are two important international meetings coming up this fall that China does not want to jeopardize. The first is a scheduled G-20 meeting hosted by China in Hangzhou, where President Barack Obama is scheduled to attend. In October, the IMF is widely expected to formally add the Chinese yuan to its globally recognized basket of reserve currencies.
"The Chinese do not want to overreact, because it would undermine their economic goals," Keith said.
Shan Huang, a reporter who has worked extensively in China, told CNBC that the country hopes the G-20 meeting will be successful and wants to avoid exacerbating tensions while the global economic recovery faces strong headwinds such as uncertainty around the U.K.'s Brexit vote and a slump in commodities prices.
It's "important that all parties show prudence and take no action to raise tensions," Russel said.