The fact that China was the biggest and strongest country in its region, combined with the fact that it is relatively isolated from any other strong countries, could have helped to encourage feelings of ethnocentrism among the Chinese.
China never had any real competitors from other ethnic groups (with the exception of the Mongols). Those people whose lands bordered China tended to be much less powerful. Japan, which was at least somewhat powerful was far away in the days of sailing ships.
Chinese, then, would have felt that everyone important in their whole world was Chinese. This is an ethnocentric way of thinking brought about by China's geographical isolation from any other serious powers.