The Chinese idiom 掩耳盗铃 (yan3 er3 dao4 ling2) literally means to plug one's ears while stealing a bell. It comes from a story that dates back to the Spring and Autumn Period (770-476 BC).
The Fan family, who was one of the large clans in the State of Jin, was almost totally wiped out by its rivals during a bitter dispute. They were forced to flee, leaving behind some of their most prized possessions. One day, a man passed by the deserted Fan residence and saw a beautiful bronze bell still hanging above the front door. The man thanked his lucky stars. He decided to steal the bell for himself. However, there was one small problem - the bell was to big and heavy to carry. The would-be thief had a brain wave. He decided to smash the bell into small pieces and carry them home in a large bag.
The thief returned with a big hammer and, with all his might, began striking the bell. Needless to say, although the bell cracked, it made a lot of noise. The thief began to worry that someone might hear him and that he would be caught red handed stealing the bell. But, then the thief had yet another brain wave. He put plugs in his ears and continued smashing the bell. The noise continued, but the thief (who was clearly not the sharpest tool in the shed) figured that if he could not hear the bell's sound, no on else could either.
Fortunately for the thief, the neighbourhood was deserted and no one heard him at work. After many hours of hard work, the bell was broken into small pieces and the thief got away scot-free. [Proving that crime does pay after all - perhaps not the greatest moral!]
Often it is said that the Chinese idiom 掩耳盗铃 (yan3 er3 dao4 ling2) is equivalent to the English idiom bury one's head in the sand. However, I think that it is slightly different. To bury one's head in the sand is to refuse to deal with the reality of something. In some cases, this will involve an element of self-delusion, but not always. For example, I may know perfectly well that something is not right (i.e. I am not deluded), but I choose to ignore it anyway. Consequently, I think the Chinese idiom 逃避现实 (tao2 bi4 shan4 shi2) is a better match for bury one's head in the sand