It turns out that after the One Child Policy was changed to the Two Child Policy, the birth rate continued to decline. It then changed to a Three Child Policy, and the birth rate continued to decline. State-run media then started cranking out articles encouraging women (especially young women) to get married and have children, and the birth rate has continued to decline. And then 2020 happened, and the birth rate declined some more. So everything they've tried, hasn't started working yet.
First-world countries can generally compensate for reduced birth rates fairly easily, by allowing some amount of immigration. But if China wanted to do that, they would probably have to tone down the extensive xenophobic propaganda that they use to deflect blame for anything bad that happens, from the ruling party onto foreigners. And then they would have to find some other way to disperse all that negative energy, or it could turn into social unrest, which the CCP absolutely Does Not Want.
So they either have to find some way to reverse the trend and get the delta birth rate aimed upward again, or else they're going to have some serious population shrinkage. And it's worse than the raw "total number of people" number makes it look, because most of the population is already too old to have children. So even though it's going to be six or eight decades before it finishes happening, the population is going to dip to somewhere around half its current size, unless they can get the birth rate to *explode* upward. Raising it from its current value (1.16 births per woman if you believe the official figures, which may be padded, possibly significantly so) to 2 or even 3 births per woman, at this point, will still leave them with a very substantial population decline in the medium term (a few decades), and _then_ it would stabilize or start to rebound.
At this point, they know about the problem. It took them way too long to realize it, but now they have. They either just haven't figured out what to do about it yet, or they're hesitating to do it for fear of backlash. (At some point, I suspect, they will at least seriously entertain the option of making birth control illegal. And if that doesn't work, there are even more drastic measures that I wouldn't put past them.)