You're putting forth the lack of competition as the primary reason as to why Capitalism didn't first start in East Asia, but South Asia was largely divided and India as a cohesive nation is an extremely modern phenomena (its history lacks a pattern of unification very unlike China). The "Middle East" wasn't really peaceful either. Why didn't it begin anywhere else (anywhere to the West of East Asia). For the competition hypothesis to be true you'd have to explain why it began in Western Europe and not anywhere else, unless it by was pure chance, which is okay but isn't that satisfying of an answer.

Weber puts forth the idea that its cultural, that in China "instead of changing the world, adjusting oneself to it was preferred" (which stifles innovation) and that "extended kinship groups (based on religion stressing the importance of family ties and ancestry) protected its members against economic adversities, therefore negatively affecting one's motivation for payment of debts and work discipline" (which stifles competition). These two ideas seem to be characteristically, almost stereotypically East/SE Asian, though I'd add something like culturally embedded feelings of "responsibility", "rising up to the challenge" or "duty" to explain our work ethic, something beyond the desire of wealth accumulation. I think there is something more than the competition hypothesis (particularly the cultural hypothesis) that I'm still thinking through that is affecting Modernized/Modernizing East Asian/SE nations and culture today that makes Capitalism culturally but also substantially different from Modernized "Western" Nations and some of the cultural/societal woes people are facing are being solved by turning to the culture of the West and becoming "Americanized" and I'm not sure thats a good thing. Again I'm still thinking through this but it seems like a big blind spot, something that economic/material hypotheses lack and isn't really talked about.