China's parliament has agreed landmark changes to the constitution that will protect private property for the first time since the 1949 revolution.
Premier Wen called the amendments of "great significance"
Sunday's endorsement came on the final day of the National People's Congress annual meeting in Beijing.
The BBC's Beijing correspondent says with this vote, China is abandoning one of the key pillars of communism.
The vote to amend the 1982 constitution was passed with 2,863 in favour to 10 against, with 17 abstentions.
Chinese Premier Wen Jiabao said: "These changes to the constitution are of great significance to the development of China."
But he also warned that China's economy is at a critical juncture, and that the country's system of governance has to keep in step with the transformation to a capitalistic economy.
"Without success in political restructuring, economic reforms in China cannot eventually succeed," he said at a press conference at the close of the annual session.
He admitted that managing China's economy would be as challenging as the Sars epidemic last year, and added that there was no room for failure.
Entrepreneurs and businessmen had lobbied for the constitution to enshrine the protection of private property.
The wording "A citizen's lawful private property is inviolable" reflects a further endorsement by the Communist Party of its policy of capitalist economics with socialist characteristics.
The amendment should help stop state officials from requisitioning property and private possessions.
Parliament also voted to enshrine human rights in the constitution, for the first time.
Delegates backed the amendments by an enormous margin
The mention of human rights reads: "The state respects and preserves human rights."
Although it is the constitution's first reference to the issue, analysts say such a brief mention is ambiguous and makes no mention of political freedom.
Questioned on the 1989 military crackdown on students demonstrating in Tiananmen Square, the prime minister defended the government's decision to crush the protests.
He said that social stability and party unity were more important than anything else.
China has strongly defended itself against Western criticism of its human rights record in recent years.
The amendments also see the words "martial law" removed from the document and replaced with "state of emergency".
Analysts say martial law was widely linked with the Tiananmen Square democracy protests in 1989.
Then-Premier Li Peng invoked martial law before the bloody crackdown on protesters.
The change may be aimed at allowing central government to deal more swiftly with disasters and crises such as the Sars epidemic.
The main focus of this year's National People's Congress has been to switch priority to the countryside and farmers.
The slogan "Put people first" was adopted by many delegates, with the recognition that national stability could be at risk if the living standards of the rural poor did not improve.