From a very disconnected position to the PAF and industry today - I think the AZM project was born not out of 5th generation requirements but more so of finding frustration when trying to get equipment for the JF-17. Even with the Chinese there are red tape and costs to customization that end up making a lot of programs unaffordable or missing their targets.
The other side of this is that requirements are changing so rapidly that unless you are able to innovate and present new solutions within a very compressed timeframe the market and scenarios change rapidly too. Cars and cellular phones are great examples, what was once the lifecycle for 10-12 years on a model now barely lasts 3-4 before consumers demand and technology warrants changes.
The F-35 is a great example where it may be curbed for a different platform while a 6th Gen is planned out. Not because the F-35 is a bad aircraft or that it wont be relevant; but because the technology that is being introduced is outpacing the growth roadmap for a particular aircraft. Which is why the USAF (
through Lockmart) has achieved the spectacular success of designing , testing and flying the NGAD demonstrator within a year. I cannot understate how massive that development is because it essentially means they can keep retailoring that aircraft out again and again and that the NGAD is more focused on software than hardware - almost taking a cue from Tesla.
@JamD and another member had a fairly good and informative discussion on it in light of radar or EW systems at some point for those who want to search for it.
Moreover, it also means that project relevance now has to planned out based upon rapid (I dare say agile) development processes using more and more common architecture patterns rather than purpose built ones.
The JF-17 may not be relevant in 10 years compared to the original estimate of 15-20 and the PAF may be seeing that and looking for next steps. Fortunately, the PAF (and PN) look be now focused less on prestige projects on the local front and more on what is required to tackle the threats. If it means moving on from a project which you may have sunk funds into for a longer term goal. That doesn't mean the
project is a failure, but that the
product from it may not be relevant anymore. So the JF-17 being capped at 150 doesn't mean the project failed: the aircraft from 2008 to now have added to the defense and performed fairly well in the roles and duties expected from them. But, the threat dynamic may be changing to where those 150 or 200 would be enough and the PAF now needs a different solution for changing threats from the east.
Speaking of the east, the Tejas is a great example of knowing when to quit and reassess although the project is looking to finally get back on track. Those resources should have been committed to the AMCA or another clean slate design - they are doing the exact steps I highlighted some 8-10 years ago(
prepared to search and provide reference lest we become a barray mian who keeps harping on his gospel from 10 years ago or how the PAF are traitors 
) on using the MNCs and private sector.
The TFX timelines look defined until 2030 and they have taken into account very advanced ADGE's - which mirrors the requirements Pakistan will face in that same timeframe.
