OBJECTIVE: To examine how the relaxation of the one child policy and policies to reduce caesarean section rates might have affected trends over time in caesarean section rates and perinatal and pregnancy related mortality in China. DESIGN: Observational study. SETTING: China's National Maternal Near Miss Surveillance System (NMNMSS). PARTICIPANTS: 6 838 582 births at 28 completed weeks or more of gestation or birth weight ≥1000 g in 438 hospitals in the NMNMSS between 2012 and 2016. MAIN OUTCOME MEASURES: Obstetric risk was defined using a modified Robson classification. The main outcome measures were changes in parity and age distributions and relative frequency of each Robson group, crude and adjusted trends over time in caesarean section rates within each risk category (using Poisson regression with a robust variance estimator), and trends in perinatal and pregnancy related mortality over time. RESULTS: Caesarean section rates declined steadily between 2012 and 2016 (crude relative risk 0.91, 95% confidence interval 0.89 to 0.93), reaching an overall hospital based rate of 41.1% in 2016. The relaxation of the one child policy was associated with an increase in the proportion of multiparous births (from 34.1% in 2012 to 46.7% in 2016), and births in women with a uterine scar nearly doubled (from 9.8% to 17.7% of all births). Taking account of these changes, the decline in caesarean sections was amplified over time (adjusted relative risk 0.82, 95% confidence interval 0.81 to 0.84). Caesarean sections declined noticeably in nulliparous women (0.75, 0.73 to 0.77) but also declined in multiparous women without a uterine scar (0.65, 0.62 to 0.77). The decrease in caesarean section rates was most pronounced in hospitals with the highest rates in 2012, consistent with the government's policy of targeting hospitals with the highest rates. Perinatal mortality declined from 10.1 to 7.2 per 1000 births over the same period (0.87, 0.83 to 0.91), and there was no change in pregnancy related mortality over time. CONCLUSIONS: China is the only country that has succeeded in reverting the rising trends in caesarean sections. China's success is remarkable given that the changes in obstetric risk associated with the relaxation of the one child policy would have led to an increase in the need for caesarean sections. China's experience suggests that change is possible when strategies are comprehensive and deal with the system level factors that underpin overuse as well as the various incentives at work during a clinical encounter.