Good Problem To Have? Chinese Corporations Sitting On $1.2 Trillion In Cash

At a time when China's economy is expanding at its weakest pace in 25 years, local companies are sitting on a collective $1.2 trillion in cash.

According to Bloomberg, Chinese firms increased their reported cash holdings in the latest quarter by 18 percent and the $1.2 trillion figure doesn't include cash held by banks and brokerages.

While there are bigger problems companies can face than holding too much cash, it nevertheless posses a problem. As noted by Bloomberg, the cash hoard is "frustrating both policy makers and investors." By not spending the cash, it signals a lack of confidence and is also contrary to the government's prior attempts to spur growth by pumping cash into the financial system.

"The government is trying very hard to push the economy through investment, but the private side isn't responding," Francis Cheung, the head of China and Hong Kong strategy at CLSA Ltd. in Hong Kong told Bloomberg. "They're not very confident."

Meanwhile, Japan-based companies are also hoarding cash - an indication that the government's fiscal and monetary stimulus measures to give the economy a boost won't work.

However, Japanese companies have only increased their cash holdings by 5 percent in the recent quarter, falling notably short of China's 13 percent.