Combine the 2 tablespoons soy sauce, the dry sherry, dash of sesame oil, flour, 2 tablespoons cornstarch, 2 tablespoons water, baking powder, baking soda, and canola oil in a large bowl. Mix well; stir in the chicken. Cover and refrigerate for 20 minutes.
Heat oil in a deep-fryer or large saucepan to 375 degrees F (190 degrees C).
Combine the 1/2 cup water, chicken broth, vinegar, 1/4 cup cornstarch, sugar, 2 tablespoons soy sauce, 2 tablespoons sesame oil, red chili paste, and garlic in a small saucepan. Bring to a boil, stirring constantly. Turn heat to low and keep warm, stirring occasionally.
Fry the marinated chicken in batches until cooked through and golden brown, 3 to 5 minutes. Drain on paper towels.
Transfer the chicken to a large platter, top with sauce, and sprinkle with sesame seeds.