The US-China Economic and Security Review Commission issued a report on Tuesday that concluded defending Taiwan in a war with Beijing had become more difficult due to Russian and Israeli arms exports.
Moscow's arms exports to China are more sophisticated than ever, and Israel - recipient of some of America's most advanced technology - has an increasingly lucrative defense relationship with Beijing, the report said.
Echoing a recent Pentagon study, the commission said China's military capabilities "increasingly appear to be shaped to fit a Taiwan conflict scenario and to target US air and naval forces that could become involved."
China views Taiwan as a rebel province that must be reunited with the mainland.
Commission Vice Chairman Dick D'Amato said that while Washington had made "strenuous" efforts to restrain Tel Aviv from selling to China, Israel had now become the second biggest arms and military technology exporter to Beijing.
"There's still not the level of cooperation and assurance that has relieved our concerns. We're very worried about this relationship," D'Amato said.
Israel annually receives $6 billion in US aid and loans, including advanced technology. However, criticism of Israel is sensitive in the US - its leading ally.
"We're very worried about this [China-Israel] relationship"
security commission vice chair
The report said Israel in 2003 assured Washington it would not sell items to China that could harm US security.
But the commission said that in 2003 "reports indicate Israeli firms have discussed a range of projects with China, including export of sensor and observation systems, security fences, microwave and optics, training, metal detectors and packages for airport and vital facilities security".
Israel also provided China with HARPY unmanned aerial vehicles, radar systems, optical and telecommunications equipment, drones and flight simulators.
The commission recommended the government restrict foreign defence contractors that sell sensitive military technology or weapons systems to China from participating in US defence-related cooperative research.
But D'Amato said that should not include Israel. Instead, he believes, the US should deal with concerns about Tel Aviv's defence ties to China separately.
In 2000, under US pressure, Israel suspended the sale to Beijing of four $250 million-a-copy advanced early warning Phalcon aircraft, similar to US AWACS planes.