ATSG said it has decided to take a step back from the project and is now looking at its entire China strategy, reported London's Air Cargo News.ATSG chief operating officer Rich Corrado said the trade dispute between China and the US and the company's purchase of aircraft convertor Pemco, which has a strong presence in the Chinese market, were factors behind this decision."(The Pemco acquisition) really provided us with some new relationships with some existing airlines within China that are opening up some strategic opportunities on a number of different fronts across our portfolio of companies that we are looking to hopefully build on from there."It didn't seem to be wise to continue starting a brand new airline in China given some of the headwinds that we were facing and some of the significant opportunities with existing potential partners."The airline would have targeted the Chinese express market, utilising six small and midsize freighter aircraft including Boeing 737s, 757s and 767s.ATSG had even gone as far as buying two aircraft to convert and lease to Okay Airline in preparation for the launch of the airline.Mr Corrado made the comments shortly after the publication of the lessor's first quarter results, which saw profits rise 59 per cent to US$15.9 million.