1) Can anyone deny foreign aid to India? Not with so much business connections....money talks. What's going on in Pakistan, from a business and economic standpoint is working towards taking it beyond the need for the foreign aid. 3-5 years from now, will show you how less and less this foreign aid becomes an important factor by the year. If the progress continues, a country with only 200 million population, and a growing economy with natural resources, shouldn't require much foreign aid to survive. Its been the mismanagement of money that's been causing the foreign aid to be such a big deal. Now there is actual work being done to grow the economy, a billion or two in foreign aid isn't going to be a success factor anymore.
2) No matter what you, I or anyone on here don't like, its a guaranteed step. Pakistan will build a sea based nuclear deterrent. It's a matter of their national interest. Did any type of sanctions or foreign aid stop them in 1998? Not really. You have the SAME PM sitting in the office again, now, backed up by a similar Pakistan focused Army Chief, combine the two, this is bound to happen.
3) China would absolutely want Pakistan to have the second strike capability. It's in their national interest against India. Knowing that there are two subs with second strike capability from the Pakistani side and may be a couple of unannounced ship based platforms, the IN would have to pay a lot of attention towards Pakistan, in case of a conflict with China. So its an indirect force multiplier for the Chinese.