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In a small bowl, whisk together 2 tablespoons water and cornstarch. Set aside.
In a medium saucepan, mix together remaining 1 cup water, garlic, peppers, sugar, vinegar, and salt. Bring to a boil over medium heat, reduce heat and simmer for 3 to 5 minutes.
Stir cornstarch mixture to re-combine, then whisk into simmering sauce and cook until thickened, about 1 minute more. Remove from heat, let cool, and use immediately or store in an airtight container in the refrigerator.