Robert Zubrin summarizes the history of the policy in an article in the Washington Times:
In June 1978, Song Jian, a top-level manager in charge of developing control systems for the Chinese guided-missile program, traveled to Helsinki for an international conference on control-system theory and design. While in Finland, he picked up copies of "The Limits to Growth" and "Blueprint for Survival" - publications of the Club of Rome, a major source of Malthusian propaganda - and made the acquaintance of several Europeans who were promoting the reports' method of using computerized "systems analysis" to predict and design the human future.Zubrin has more details at the link. I can't vouch for the accuracy of his claims, but I know Viewpoint has a few Chinese readers, and I invite them to weigh in on the matter via the "Contact Us" key.
Fascinated by the possibilities, Mr. Song returned to China and republished the Club's analysis under his own name (without attribution), establishing his reputation for brilliant and original thinking. In no time at all, Mr. Song became a scientific superstar.
Seizing the moment to grasp for greater power and importance, he pulled together an elite group of mathematicians from within his department and, with the help of a powerful computer to provide the necessary special effects, issued the profoundly calculated judgment that China's "correct" population size was 650 million to 700 million people - which is to say, some 280 million to 330 million less than its actual 1978 population.
Mr. Song's analysis quickly found favor at top levels of the Chinese Communist Party because it purported to prove that the reason for China's continued poverty was not 30 years of disastrous misrule, but the very existence of the Chinese people. Paramount leader Deng Xiaoping and his fellows in the Central Committee were very impressed by the pseudo-scientific computer babble Mr. Song used to dress up his theory and even more impressed by the possibilities that arrogating the power to permit or deny children would provide to the state.
Thus began the most forceful population-control program since Nazi Germany. Qian Xinzhong, a Soviet-trained former major general in the People's Liberation Army, was placed in charge of the campaign. He ordered all women with one child to have a stainless steel IUD inserted and to be inspected regularly to make sure they had not tampered with it. To remove the device was deemed a criminal act. All parents with two or more children were to be sterilized. No pregnancies were legal for anyone under 23, whether married or not, and all unauthorized pregnancies were to be aborted.
Women who defied these injunctions were taken and sterilized by force. Babies would be aborted right through the ninth month of pregnancy, with many crying as they were being stabbed to death at the moment of birth. Those women who fled to try to save their children were hunted, and if they could not be caught, their houses were torn down, and their parents thrown in prison, there to linger until a ransom of 20,000 yuan - about three years' income for a peasant - was paid for their release.
Babies born to such fugitives were declared to be "black children," illegal non-persons in the eyes of the state, without any right to employment, public schooling, health care or reproduction. Millions have been confiscated from their mothers and placed in "orphanages" where, if not adopted in short order, they are left to expire without food in "dying rooms."