What Is an Economic Entity?

Economic entity refers to the independent accounting, clear property rights and gradual implementation of state-owned large and medium-sized enterprises that use independent assets, idle assets, and effective assets of policy-based closure of bankrupt enterprises to carry out structural adjustments, reorganizations, and separation of main and auxiliary businesses. Enterprises with diversified property rights, relocating surplus employees in enterprises and closing employees of bankrupt enterprises. In the course of economic operation, the real economy is a concept used to describe the economic activities formed by the production and sales of materials and the provision of labor services for this purpose. It includes industries such as agriculture, industry, transportation, commerce, construction, post and telecommunications.

Economic entities

The traditional view is that the real economy refers to those sectors or industries that are related to the national economy and the people's livelihood. The most typical ones are machinery manufacturing, textile processing, construction and installation, petrochemical smelting, planting and mining, and transportation.

Material information

Overview of economic entities

Virtual economy depends on the real economy

Represented by three points:

First, the real economy provides the material foundation for the development of the virtual economy. Virtual economy is not myth, but reality. Therefore, instead of hanging in the sky, it stands on the ground. This fundamentally determines that whether it is produced or developed, the real economy must be the material condition. Otherwise, it will become an air tower neither in the sky nor in the ground.

Second, the real economy places new demands on the virtual economy. With the progress of the overall economy, the real economy must also develop to a higher level. Otherwise, it will "disappear" faster. The new requirements of the virtual economy in the development of the real economy are mainly the degree of marketization of securities and the internationalization of financial markets. It is also because the real economy has put forward a series of new requirements for the virtual economy in its development process, so that it can be produced, especially it can be developed. Otherwise, the virtual economy will become rootless.

Third, the real economy is a sign of the degree of development of the virtual economy. The starting point and end point of the virtual economy are both the real economy, that is, the original intention of developing the virtual economy is to further develop the real economy, and the final result is to serve the real economy. Therefore, how the development of the real economy itself indicates the degree of development of the virtual economy. In this way, the real economy has naturally become a mark to test the degree of development of the virtual economy.

Virtual economy

This manifests itself in three points:

First, the virtual economy affects the external macro operating environment of the real economy. For the real economy to survive and develop, in addition to its internal operating environment, it must also have a good external macro operating environment. In this external macro operating environment, it includes the state of the total amount of funds, the state of fund raising, and the state of fund circulation in the entire society. The situation in these aspects will greatly affect the survival and development of the real economy, and all of them have a direct or indirect relationship with the virtual economy. Therefore, the development status of the virtual economy will greatly affect the external macro operating environment of the real economy.

Second, the virtual economy adds strength to the development of the real economy. The first condition for the real economy to operate, especially for development, is that there must be sufficient funds. So where do the funds for various types of real economy come from for development? There are only two ways: one is to lend to various financial institutions with banks as the main body; the other is to raise funds through the issuance of various securities such as stocks and bonds. From the perspective of development trends, by comparison, it is more realistic, convenient and quicker to solve the problem of funds needed in the development of the real economy through the second approach. In this way, the virtual economy has added stamina to the development of the real economy.

Third, the development of the virtual economy restricts the development of the real economy. Historically, the development process of the virtual economy has gone through five stages, namely the capitalization of idle currency, the socialization of interest-bearing capital, the marketization of securities, the internationalization of financial markets, and the integration of international finance. Facts have proved that different stages of the development of the virtual economy have different impacts on the development of the real economy, that is, the higher-level stage of the development of the virtual economy has an impact on the development of the real economy than the lower-level stage of the development of the virtual economy. The impact of the degree of economic development is greater. Otherwise, it will be smaller.

Summary of economic entities

To sum up, there is an extremely close interdependent and mutually reinforcing relationship between the virtual economy and the real economy. No one can do without them, at least for a considerable period of time.