China, which raised interest rates for a third time in 11 months this weekend, is discovering that solving one of its two main economic problems makes the other one worse.

The interest rate increases and other measures are cooling investment in factories, real estate, and other fixed assets, allowing Premier Wen Jiabao to claim partial victory in a fight against wasteful spending. At the same time, the trade surplus — which has pumped cash into the economy, fueling inflation and asset bubbles — is ballooning.

The People’s Bank of China raised interest rates to the highest in almost eight years on March 17. By curbing investment, Mr. Wen has reduced demand for imported steel and cement for factories, exacerbating the trade imbalance, and straining ties with America.

“It’s difficult to reduce both investment and the trade surplus,” the chief Asia economist at Citigroup Inc. in Hong Kong, Huang Yiping, said. “You can do one but you’ll see a rebound in the other.”

Mr. Wen is concerned that building too many factories will leave the world’s fastest-growing major economy vulnerable in a slowdown. The central bank has increased the amount of money lenders must set aside as reserves five times in eight months, sold bills to soak up cash, and restricted property investment.

America and Europe want the yuan to strengthen faster to make China’s exports more expensive and global trade more balanced. The currency has gained 7% since the end of a decade-long peg in July 2005. China’s leaders are concerned quicker gains will cost jobs and cause social unrest in a country with 200 million migrant workers and an average rural income of $465 a year.

Cooling measures are working. Growth in spending on factories and real estate slowed to 23% in the first two months of the year from a peak of 31% in the first half of 2006.

Slowing investment growth means imports of raw materials such as steel and copper for factories grow less quickly. The trade surplus jumped ninefold in February from a year earlier to $23.76 billion after exports soared 52%. Imports rose only 13%.

“This is a policy dilemma,” an economist at Bank of America Corp. in Hong Kong, Wang Qing, said. “The currency needs to appreciate more, but the government worries that it might not be effective and job security among Chinese is also an important factor to consider because exports have created so many jobs.”

China needs to create at least 9 million new jobs for urban residents this year, Mr. Wen said on March 5.

China’s economy expanded 10.7% in 2006, the fastest pace in 11 years.

The stock market has reached record highs this year, and also had the biggest drop in a decade, underscoring government concerns about boom-and-bust cycles fueled by the cash from a trade gap that last year widened to $177.5 billion.

The government last year began to shut inefficient plants and curb investment within 11 industries including steel, coal cement, and aluminum to avoid overcapacity, according to Mr. Wen. China is also taking steps to boost domestic demand and curb a reliance on exports and investment for economic growth.