ISLAMABAD—The huge Chinese global infrastructure building program known as the Belt-and-Road Initiative was supposed to help unleash an economic boom in close ally Pakistan that was beneficial to both countries.

Instead, Pakistan is now enmeshed in an economic crisis, putting the brakes on new building, with less than half of $62 billion of Chinese projects carried out. The Chinese infrastructure, all built by Chinese state-owned companies, required the Pakistani government to guarantee repayments to Beijing.

Pakistan...