TAIPEI—Taiwan has spotted Chinese drones circling the Taipei-controlled Pratas Islands in the South China Sea and may shoot them down if they stray too close, a government minister said on Wednesday, a move that could dramatically increase tensions with Beijing. Speaking at parliament, Lee Chung-wei, who heads the Ocean Affairs Council under whose purview the Coast Guard falls, said that they had recently spotted Chinese drones circling the Pratas, though they have not flown over the islands. “They have never entered our restricted waters and airspace, they’ve just flown around them at a certain distance,” Lee said. While China does not recognize Taiwanese claims of sovereignty, its aircraft and ships generally stay outside Taiwan’s restricted zone, which extends 3.7 miles from its coast. Asked how the Coast Guard would react if a Chinese drone entered that restricted zone, Lee said they had rules of engagement. “After it enters it will …