The indirect affects of economic trade are one thing, for which you are right in the general sense; although some would argue that China would easily get foreign investment and sell its goods elsewhere if we did not trade with China.
Our allies directly supplying advanced military hardware to China is a whole other dimension and it is not hypocritical of the U.S. to expect Israel to not supply such material to China.
I did not envoke hypocricy. But the effects of the trade with China are direct all right. The money goes straight to developing and buying sophisticated weaponry, if not from Israel than elsewhere. And this weaponry will kill the American soldiers if the US chooses to interfere with the Chinese-Taiwanese conflict on the side of Taiwan (and I'm not even mentioning the long-term challenges). True, China can find other investment sources, let them, but let them not get money from us. And the problem with Israel can be fixed in half a jiffy, if the US government says it like it means it. Yes, the Israelis are desperate, but not crazy.