Gently mix beef, water chestnuts, 2 teaspoons cornstarch, five-spice powder and salt in a medium bowl until combined. Shape the mixture into 12 balls (use about 2 tablespoons each to make 1 1/2-inch meatballs).
Whisk broth and the remaining 1 tablespoon cornstarch in a small bowl until smooth.
Heat 2 teaspoons oil in a large nonstick skillet or nonstick wok over medium-high heat. Add the meatballs and cook, turning once, until brown, about 3 minutes total. Transfer to a plate.
Add the remaining 2 teaspoons oil to the pan. Add garlic and crushed red pepper and cook, stirring, until fragrant, 15 to 30 seconds.
Add the reserved broth mixture, Szechuan sauce, cabbage and mushrooms; cook, stirring, until the cabbage is just wilted, about 2 minutes.
Reduce heat to a simmer, return the meatballs to the pan, cover and cook until the sauce is thickened and the meatballs are cooked through, 8 to 10 minutes. Serve sprinkled with scallions (if using).