In large bowl, combine mochiko flour, sugar and baking powder. Add coconut milk and water and whisk until combined.
Preheat oven to 350 degrees F. Grease a 9 x 13 inch pan.
Pour half of mixture into prepared pan. Bake in oven for 15 minutes uncovered. While baking, add red food coloring to the remaining mixture.
Once the first layer is done, carefully pour the pink layer on top. Cover pan tightly with foil and bake for 1 hour. Let stand until pan is completely cool (3 hours or even overnight).
Dust a cutting board with potato starch and turn pan over to release the chi chi dango. sprinkle more potato starch on top, and using a plastic knife, cut unto rectangles.