There are a variety of reasons. In general, I agree with you. A decline in human population around the world would be a good thing. In their case, though, the decline could be seriously steep, and hard to counter. Some estimates put their birth rate as low as 1.5 children/woman. The replacement rate is around 2.1. If the birth rate is that low, your population becomes older FAST, as noted in the video. The retirement age in China is also fairly low, which means their work force, which has driven their growth, is going to become seriously top heavy, possibly within a couple decades. As the number of workers declines relative to the retired population, that puts a strain on the workforce and society in general. Strains on society are something that tends to get the leadership in China pretty concerned.

There's another issue, which may or may not matter. They may feel that they have peaked as a society. That could have a cultural impact. I've heard some say that's a big factor. I'm not sure that I buy it. Sure, some people won't be happy with that, but I find it hard to believe that will matter to a whole lot of people.

In any case, the reason WHY they are freaking out is debatable. The fact that they said they'd publish the census numbers a month ago, and thus far have only published a series of contradictory statements about what the numbers will show, certainly suggests that they are unduly concerned about what the numbers show. It's pretty clear that they HAVE the numbers, since they are leaking information about them, then denials of the leaks that suggest the leaks are actually correct. That sure feels like there's some freaking out going on.