A combination auction and raffle. You buy as many tickets as you like, and bid them on the item you want. A winning ticket is drawn from the tickets bid on each item, and the item is given to the owner of that ticket.
A rather annoying gimmick, in my opinion. You are essentially buying a chance to win. You can increase your chance by buying and bidding more tickets on an object, but you can never increase your chance to a certainty. There is usually not a limit to the tickets that can be bid on an item, so you often can't even predict the probability that you will win -- that depends on how many other people are bidding, and how many tickets they bid.
Often you will buy your tickets by the sheet (all the tickets on a given sheet will have the same number, for easy identification of the winner). If you are limited to buying only one sheet, this does improve your ability to predict the probability of your winning, to some small extent. But then, it is not generally in the interest of the 'auctioneer' to limit you to buying just one sheet...
These are most often held as a part of a fundraiser.
Also called a Chance auction.
I have been unable to find the origins of the term 'Chinese auction'.