The one-child family policy in China, if successfully implemented, will drastically alter the population age structure in the coming years which will in turn affect the demand and supply of the welfare state. Using several population indices projected on the basis of different total fertility rates, it is found that the aged population will increase significantly and hence their needs for social services including social security and health care will increase accordingly. Because the responsibility for caring for the old in China still largely falls on the family, it is important to establish an universal social security system supported by the State in order to reduce fertility. On the other hand, because the baby boom cohort in the 1960s are entering their adult ages, the labor force will continue to grow and maintain at a high level for at least another forty years, despite the decline in birth rate. While the shrinkage of the young will offset part of the increaasing burden of the elderly, the government must develop an universal social security system and improve occupational welfare, child care, and higher education in the near future in order to achieve the goals of the four modernizations as well as population control.