The real question here is not whether ITAR prevents Chinese participation in ISS, but whether ITAR itself benefits or harms the United States. ITAR is sold as protecting American technological superiority, but under the ITAR regime we have fallen from supplying about 80% of commercial satellites worldwide to about 35%, while US launches of commercial satellites have just about disappeared. Thales Alenia trumpets in headlines that the satellites it sells (some to be launched by China) are "ITAR-free". http://www.reuters.com/article/2012/02/09/us-usa-france-chinasatellite-idUSTRE8181F020120209
The fallacy of ITAR is that it assumes we are still fighting the Soviets. Our competition with China is economic, and far from helping, ITAR is crushing our ability to export high-tech products worth billions. If we cannot sell them in the export market they will soon be obsolete.
As a response to the Thales sale, the US threatened to cut off export licenses of US companies that supply Thales, crippling our exports of high-tech components as well as systems. So... for revenge we again shoot ourselves in the foot by blocking our own exports.
Obviously any technology that is sold commercially is going to be available for competitors to see, ITAR or no ITAR. The only protection for manufacturers is to keep one step ahead in technology and also to make it profitable for other countries to enforce US patents. It should be mentioned that the Obama Administration is well aware we are shooting ourselves in the foot with this but continues to enforce it at the behest of GOP leaders in Congress. Military hardware that must be kept secret is classified. Restricting the export of unclassified products is a stupid policy that only hurts US interests.
Finally, we need to ask whether Chinese participation in ISS helps or hurts US interests. If our goal is to ignite a new cold war and spend another generation building nuclear bombs and fallout shelters, then perhaps doing everything we can to make it impossible for US and Chinese astronauts to work together makes sense.