I had thought about this many times and agree with you. It's competition that spurs innovation. A gigantic power may have the resources to perform great deeds but such a power also possess the potential to commit terrible mistakes of a massive nature - e.g., Great Leap Forward and the Cultural Revolution.
I have another analogy: I had always wondered why is it that there are many grand palaces in Europe and India but only one in China. That's because China had in most of its history only a singular power that did not tolerate rival centres of power. There have never been autonomous states or sub-entities, or even independent or self-governing city-states. Most of the time, only one power centre, that of the ruling dynasty, is allowed. In contrast, Europe and India have always been disunited, with a complicated array of kingdoms, autonomous duchies and city states, each compete and flourish in a thousand ways. As a result, one finds centres of excellence and diversity across the land. I am not saying China should be split apart into different states, but some kind of mixed, gradual devolution of power while retaining overall political unity can be considered so that everyone prosper.