Two children would have maintained (or nearly maintained) the population, whereas the issue was that Mao encouraging Chinese population growth in the hopes of emerging the dominant power after a nuclear exchange (no, really) had stretched China's resources to the breaking point. After Mao's tenure, birth rates were decreasing, but the Chinese government decided it still wasn't declining fast enough - thus, the one-child policy.
The issue is that one child PLUS increasing lifespans meant a larger retired population with a smaller working population to support them. So now China is attempting to get people to have more kids, again.
It was implemented largely through the government badgering women pregnant with a second child (or more) to get abortions, and by rescinding social service support from families which had more than one child, and making that threat very known.