It's irritating that the US hasn't swallowed their pride and invited China to join in on the ISS. If we can manage ITAR with Russia, we can manage it with the Chinese.
The issue isn't so much ITAR, but tech transfer in general though. The US is an economic rival to China whereas Russia has roughly the GDP of NY. We've seen time and time again that feeding China technology only results in it being replicated and further developed domestically.
For the general tech transfer issue, did the embargo actually work? Look at supercomputers, satellites, nukes including its delivery systems and jet fighters etc. It didn't work very well to serve the US interests. It is a failed system that probably slowed we Chinese down a little bit, but in a long run it gives your rival all motivations to invest heavily in _all_ those areas and eventually master them. When the US is basically forcing its rival to invest in itself, it sounds like a strategic mistake to me.
As far as the trade imbalance, the things that would fall under ITAR (the only goods that are significantly restricted) are not particularly significant on a global trade scale. Yes, the US could sell a few billion dollars worth of F-22 jets to China, but that still wouldn't make a dent, and to acquire the tech, China would only have to buy one.
We're our own worst enemy.