tThe purpose of this paper is to analyze the effects that the Chinesecompetition has had on the Mexican labor market considering thatboth countries offer abundant low-skill workers and that China isone of the largest export countries, which directly competes withMexico in the manufacturing industry. Particularly, panel data isused to estimate a dynamic labor demand and a dynamic wageequation to measure direct and indirect effects of the Chinese com-petition over these two variables. A negative direct impact wasfound, due to the Chinese imports into Mexico, affecting employ-ment, and on a smaller scale affecting wages. Evidence was notfound recording an indirect impact (via the US market) neitheron employment nor on wages. Finally, our results indicate thatincreases in the share of imports of the United States from Mexicoare associated with increases in employment in Mexico but not withwages.