It may work in short term but then you run out of population in long term. And suddenly any gains from short term improvement is under a big question mark.
China has a poor social security net. The one-child policy has resulted in a couple having to provide or care for 4 parents and 8 grandparents.
That's is in no way sustainable on an individual level and worse on a societal level when you have a small working population and a large number of people that require care.
Future generations have to pay off the debt generated by the current generation. Same as everywhere. You can either grow the population or make the economy more efficient, China still has the latter lever available to pull.
I agree in theory with you. But you can 'bank' labour for later on. Building infrastructure (that will last) when you have a population bulge, means that the generations after can take advantage of that infrastructure, and have to do the lower amount of work, of maintaining it. This can go for things like education, investing in businesses, and generally any capital.
Of course you can also over build this capital that will never be used, but will need to be paid back (for example a local government pays to build a town that there are no people to fill it with) and the maintenance is too much, but you still have to look after the people who did the building.