In a saucepan, combine milk, water, sugar, salt and butter together then bring to boil over medium heat. Remove from heat once it starts to boil.
Stir in the flour immediately to the liquid mixture and stir gently until a loose dough forms that pulls away from the sides of the pan.
Transfer dough to a mixing bowl and let it cool down for 3-5 minutes.
Meanwhile, prepare the chocolate dip by placing the chocolate and cream in a microwave-safe bowl, heat for 10 seconds on high and stir until chocolate is melted. Pulse for another 5-10 seconds if needed.
Add the egg and vanilla extract and beat it into the dough with a whisk, or use an electric mixer.
Transfer the dough to a piping bag fitted with a large 4 or 5 star tip.
Heat oil in a deep pan (about 4 inch deep) over medium heat. Once the oil is hot, squeeze out about 5-6 inch of dough and using a pair of scissors, cut it on the other end dropping it to the oil. Fry 5-6 pieces at a time
Fry 2-3 minutes on each side or until golden brown. Remove from oil and place them on a plate covered with paper towels to remove excess oil. Roll or sprinkle the churros with the sugar-cinnamon mix.
Serve while warm with the chocolate dip.