They saw no need to actively expand outwards and to conquer new found territory, as they had no reason to. Unlike what happened in Europe, the various small kingdoms surrounding China entered into a tribute-gift relationship, where the Empire and said kingdom would exchange gifts as a token of peace. It's the same reason why China didn't become larger - it saw no need to conquer these regions, instead opting to engage in peaceful negotiations. The Chinese Empire would allow various Mongol tribes to marry into the Empire, or they would set up a gifting system, to keep them at peace. The Empire set up trade with its Eastern neighbours, and through trade silk, cotton, wood, horses, and so on were passed between the Empire and its surrounding kingdoms/empires/territories.

In essence, early China developed differently from Europe in terms of diplomatic ventures and attitudes. China had a vastly different approach to surrounding threats (or what they perceived as potential threats) - they pushed for peace. Also the fact that they managed to establish their own system of trade and law within the Empire early on without outer influence helped in demonstrating their power.

I'm not too sure about what you mean with 'interaction spheres' and diffusionism and interactionism though, although I'd hazard a guess and say /r/AskAnthropology could help you out there.

Source:

Organizing Through Division and Exclusion - China's Hukou System - Wang, F. L.