The South China Sea 'V-I-P' solution

As a result, new host countries for Chinese inward investment in infrastructure upgrades may hesitate. They'll worry they're on their own if China controls their internal infrastructure and plays only by its own rules.

Forced to choose between territorial expansion and domestic unemployment, China almost certainly will back down on the South China Sea. Given this, expect Chinese pragmatism to prevail.

Given this, expect Chinese pragmatism to prevail over principle in the South China Sea.

This will be particularly so if the UN appeals tribunal ruling occurs while the Philippines holds this year's rotating leadership (following China last year) of the Asia-Pacific Economic Cooperation Group.

As a result, look some accommodation between China and the Philippines. Monitoring developments in the Philippines with State Grid are a good place to detect signals.

Another place to watch will be developments between Philex and CNOOC regarding Reed Bank, where a template-creating joint exploration and potential development agreement could be reached.

That, in turn, leaves Indonesia: the newcomer to strife with China.

Indonesia's been dragged into South China Sea territorial disputes due to new versions of China's vague Nine-Dotted Line.

This now implies China claims oil and gas rich waters near Indonesia's Natuna Islands. In response to this, Indonesia's beefing up its military presence in the islands. It's also taking a harder line toward illegal fishing.

Indonesia is Southeast Asia's most populous country and largest economy. Indonesia also is the Association of Southeast Asian Nation (ASEAN) states undisputed diplomatic heavyweight.

Indonesia advocates the development of a 21st Century Blue Economy.((21))

By this, Indonesia means greater ocean protection and sustainable economic development of its riches. Movement between China and her southern littoral neighbors toward agreeing on Joint Development Areas linked to common infrastructure can help develop and protect the Blue Economy.

This also represents a major opportunity for China's infrastructure state champions.

Between now and the major COP21 meeting in Paris in December in which the world's nations must agree binding greenhouse gas reduction targets, China and her South China Sea neighbors have an ideal opportunity to postpone their offshore territorial disagreements while they cooperate to reap the gains.

The V-I-P countries are the ones to watch.