The $19.5 billion Chinalco-Rio Tinto deal would have been the biggest investment deal in both Australian and Chinese corporate history.

But, despite its failure, business in China will recognise that the deal was an "aggressive transaction" and will not be deterred in investing in Australia, says James Philips, Minter Ellison partner and head of M&A in the Sydney office.

"[The deal] included not only increasing the shareholding at the listed company level but it also included acquiring a direct interest in a number of the underlying Australian assets, plus entrenching Chinalco on the board of a number of the operating and marketing companies," he says.

"I think that there will continue to be interest in Australian assets from Chinese buyers ... [but] I think we might see some less aggressive strategy structures like taking minority interest in Australian companies and unincorporated joint ventures."

President (NSW) of the Australia China Business Council and partner at Hunt & Hunt Jim Harrowell AM agrees that Chinese businesses are encouraged to look at investment opportunities outside the country through its "go out policy". He says, however, that he feels frustrated that sometimes too much focus is spent on negative points in relation to China.

"I think the development of China can have a huge positive impact on this country and they want to work with [Australians] - we're regarded well in China. China likes dealing with Australians and we should encourage it," he says.

"The Australian China Business Council has recently launched a publication which shows that China trade can provide a potential benefit of an average of $3400 per Australian household. That must be good."

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Lawyers, says Harrowell, should encourage inbound investment with their foreign clients to generate more legal work, particularly in the emerging markets in South-East Asia, China, India, Indonesia and Vietnam where a real growth opportunity exists.

"Work for lawyers will include mergers or acquisitions where Chinese businesses are acquiring equity in Australian businesses. There will be due diligence work [and] regulatory work to the extent that the investment requires FIRB approval. There will be ongoing work acting for new significant clients in Australia, which will include some of the Chinese companies that invest here. So there is potential for completely new clients in many ways," he says

Despite the rejected Chinalco deal, Rio-Tinto announced that it has chosen to raise capital by way of a $US15 billion ($18 billion) rights issue and will also enter into a joint venture with BHP Billiton (BHP) on their respective iron-ore assets in Western Australia worth about $US10 billion.

Allens Arthur Robinson will be working on Rio's rights issue as co-principal advisors with Linklaters and as principal advisors on the joint venture with BHP. Harrowell says legal work would be generated from the joint venture but may not be ongoing.

"The problem it presents is once that process has been gone through, then the legal services providers to BHP and Rio will settle down and just keep doing the thing they've always done for those companies. So it might be a burst of legal activity for the joint venture, but, in terms of ongoing legal work, it will pretty much be the status quo I would think," he says.

However, it has been reported that the Chinese Government will slap trade sanctions on BHP and Rio Tinto if they join their iron ore business without first gaining permission from Chinese competition authorities.

Steel industry leaders have also complained that the new deal will leave them vulnerable to an iron ore "monopoly", but Philips says this is incorrect from his understanding of the transaction.

"It's a joint venture structure so that each of Rio and BHP Billiton will be separately marketing their iron ore - so it's a production joint venture. They're combining their efforts in producing iron ore, but then they're selling it separately. If that's true [then] it would seem that the reporting that it is creating a monopoly is actually inaccurate," he says.

Meanwhile, Harrowell says China will continue to look to invest in Australia, particularly in the resources area, to ensure long-term security for their needs for iron ore and coal, and to continue the growth of the Chinese economy.