@Korean Well, a couple of things.
You are right that Pakistan's aeronautics sector is not currently at the level where it'd be able to develop new aircraft entirely on it's own, but most countries aren't. Even countries like Sweden(which develops the JAS-39 Gripen) have to import critical avionics and engines from the US. Only three countries(US, Russia, China) have projects making modern jet engines. The UK used to be big, but now only makes trainer engines, and France's M-88 is an outdated engine with mediocre/older-gen specs. So yes, we are obviously not at that level where we're able to make our own planes.
The one thing that the Saudis have, is an immense amount of money to spend. To give you an example, India launched it's "MMRCA" deal valued at 11 billion, with their media promoting it as the "deal of the century", India only relatively recently got some disposable money to purchase aircraft - their previous major defence deal in the 80's for MiG-29 aircraft had to be paid for in mangoes. So it's understandable why they would make such a big deal out of it. But in comparison, Saudia Arabia launched it's own modernization drive with a $80 billion deal. And they did it without any fanfare or "deal of the century" stuff, because they're used to spending that sort of money, they have foreign currency reserves of over a trillion dollars, which very few nation/entities like the EU, China, and Japan have.
I don't think their aeronautics sector has advanced to the level the Europeans are at, but I do think some research would show that they have made a remarkable amount of progress this past decade. The Eurofighter deal for example, has an unprecidented level of Saudi manufacturing, the Saudis have the money to pay the Europeans handsomely, to set up avionics and sub-component manufacturing in KSA.
And about Pakistan's JF-17 initiative. Rightnow the economy's hemorrhaging badly and the IMF's punitive policies have started to show visible damage, crippling many export-oriented sectors of the economy(textile manufacturing has largely moved out to Bangladesh during this govt's tenure for example). However, the Pakistani Aeronautics Complex has been manufacturing avionics since the late 60's(for the F-104). There have been many avionics projects over the years, for example, licence-manufacturing Selex Galileo radars we used in Chinese F-7's(Selex is a world-renown brand, also makes radars and avionics for the Eurofighter, Panavia Tornado). And given the amount of exposure to western aircraft industries, Pakistan also has a guiding role, Chinese engineers coming to Pakistan to study Mirage III/Vs in the 70's, F-16 Block-15s in the 80's, etc. Even the Chinese-origin F-6s that Pakistan operated, the Chinese aircraft industry designed innovations like gondola-tanks for the PAF, that were later found useful by the Chinese, and incorporated into PLAAF aircraft as well. And the F-7s also recieved hundreds of modifications that similarly rippled out into Chinese fleets as well.
That in no way means that the Chinese industry is dependant on Pakistan, or ever was. But Pakistan's exposure to western aircraft helped guide the Chinese sector during it's formative years. The JF-17 that you talked about - we had a team of 30 western and Chinese-trained aeronautics engineers participating in the project, one of the most visible contributions of theirs was the cockpit design(MMI - Man Machine Interface), and concepts from the JF-17's MMI were later on used in the J-10B's MMI as well. Before the development of the J-10B, the JF-17 had the most sophisticated MMI of any Chinese aircraft(including Chinese J-10A).
So while Pakistan's indigenous capabilities should not be over-stated, they shouldn't be understated either, the facts speak for themselves. Because the PAF had to train to fight an adversary fives times bigger than itself(India), it had to, out of neccessity, either learn to perform and excel, or simply vanish in the dustbin of history. Early on, the British AF training methodologies were dropped and USAF training doctrines were adopted(USA and Pakistan enjoyed a period of excellent foreign relations - they needed us in their SEATO/CENTO anti-Soviet group). So even in the 1965 war with India, the PAF achieved air superiority against a larger airforce, managed to shoot down around a number of Israeli aircraft in their '67 and '73 wars with the Arabs without loosing any aircraft(despite flying inferior MiG-19s and some MiG-21s against superior US-supplied aircraft). And even recently, in training exercises with the Europeans, PAF F-16s got three simulated kills against Eurofighters without any losses on their part. And there was an exercise with French naval Rafales, pitted against PAF F-16s and Mirage IIIs, even the French noted the remarkable proficiency the PAF pilots had with the aircraft, and their level of effectiveness against the Rafale which was a much more modern adversary.
So my point is, we don't make aircraft, but we still do have an impressive record, and some of this experience has been shown to make a difference. JF-17's aim is to go from 50% indigenous production, to an eventual 100% indigenous production, right down to it's radar being manufactured at the Aeronautics Complex facility at Kamra. *Whew* that was a long reply, you raised an interesting point and I felt it deserved a detailed&logical reply.
