Using a cleaver or knife, slice the shrimp from the back, leaving a small donut-like hole in the center, essentially butterflying the shrimp. Be careful not to cut all the way through the shrimp. Rinse away any veins under cold water. Drain well.
Put the shrimp in a bowl and add the egg white, cornstarch and 1 to 2 tablespoons of water. Mix well. The consistency should be silky and the color milky.
In a large wok, heat 2 cups of the oil to 280 degrees F, or place 1 shrimp in the oil and when bubbles rise from it like Champagne bubbles in a glass, add the rest of the shrimp. Turn the shrimp gently in the poaching oil. When they are white and fluffy, remove them with a stainless steel strainer or brass metal strainer. Put the cooked shrimp in a colander to drain.
For the sauce. In a small saucepan, mix the chicken broth, vinegar, ketchup, soy sauce, sherry, garlic, ginger, sugar, and chili paste. Stir well. Bring the garlic sauce to a boil, lower the heat to a simmer.
In a clean wok, heat the remaining 1 tablespoon of oil to smoking. Add the sliced water chestnuts and stir-fry for 30 seconds. Add the garlic sauce, stir, and bring to a boil. Stir in the cornstarch mixture and bring to a boil, stirring until thickened. Add the shrimp. Toss and stir 3 times until well coated. Stir in the sliced scallions and serve.
Recipe courtesy of Stuart Chang Berman, Potsticker Chronicles, John Wiley & Sons, 2004