September 8, 2006:
Pakistan and China have been have so far failed in their two decade effort to produce high-tech weapons for export markets. So far, the effort has produced the Al-Khalid tank (a souped up version of the Russian T-72), the F22P frigate (a 2,600 ton warship with mediocre anti-air/ship/submarine weapons) and the FC17 fighter (an F-16 wannabe, with about half the performance.) All of these systems sell for about half what Western equivalents go for. But customers are apparently more concerned with performance.
These joint development deals were not set up just for exports, but to take advantage of other benefits. Pakistan, for example, h as more recent experience in mechanized warfare. In fact, China has not fought a major campaign in over fifty years, and only two minor ones (mountain warfare with India in the 1960s, and some border battles in the jungles with Vietnam in 1979). China has done some air and naval skirmishing with the Taiwanese, but nothing as intense as what the Pakistanis have gone through as recently as 1999 (another mountain battle, with India). China has more money and industrial infrastructure than Pakistan, and this has helped Pakistan build up its military-industrial capabilities. .
Back in the 1980s, when the two countries began this co-production deal, apparently they believed that Pakistan's stature in the Moslem world would provide a marketing advantage. Alas, the end of the Cold War, plus the spectacular performance of U.S. weapons in the 1991 Gulf War, made "cheap and simple" a much harder sell.
The end result is that China is getting some more arms exports. But it has long been exporting to Pakistan. The real winner is Pakistan, which gets to build up its arms production capability.