Well maybe it was arrogant and ignorant, but at least thanks to this policy China didn't feel the need for colonize and reduce to slavery other lands and people as european did. So from this point of view it was quite a smart way of thinking imo.
Comparing the history of Europe and China from that point on, I wouldn't say it was the smart way of thinking. Decent perhaps, yes, but only because of outcome, not intent, and only based on our current values. It's very easy to declare moral superiority from the relative wealth offered by western society, and cry crocodile tears because of all the pain and suffering done by your forebearers and from which you now reap the benefits. But the fact of the matter is that curiosity, tenacity and enterprise are smart, and isolationist navel-gazing is stupid. This is a fact countries like Japan and China learned the hard way, and the west will too very soon, if we will keep our smug and self-righteous ideas about the economic colonialism by Asian economies in, for instance, Africa (or Greece).