At a meeting tonight the party's leaders are likely to ratify a decision to rebuff China's offer of a chance to participate in a Peking-run body, the Selection Committee, which will choose the head of the territory's government after next year's transfer of sovereignty, and be responsible for the appointment of members to a provisional legislature which will replace the current body after it has been dissolved by the incoming sovereign power.
The Chinese government previously favoured a policy of deploying the blunderbuss in dealing with the democrats, but it now appears to have gained the upper hand by offering an olive branch.
This was presented by the Chinese Vice-Premier, Qian Qichen, who has special responsibility for Hong Kong. He said that China was willing to work with those who "hold different opinions about the course and pace of democratic development as long as they share the common ground of support for the resumption of sovereignty". This is a far cry from the usual practice of branding the democrats' leaders as "subversives" and "stooges of the British imperialists".
The democrats quickly responded by saying they "strongly welcome" Mr Qian's remarks, describing them as "a positive and constructive step". However Martin Lee, the democrats' leader, firmly ruled out participation in the Selection Committee because "it is conditional on participating in a process which will undermine democracy in Hong Kong".
Democratic Party members fear that they will lose credibility by joining a body which is playing a role in dismantling elected bodies and replacing them with unelected provisional councils. They feel that they have secured a high degree of popular support because of an uncompromising stand of opposing China's plans for undermining democratic institutions.
This position does not appear to be well understood in Hong Kong. A recent public opinion poll showed that 60 per cent of respondents wanted the Democratic Party to join the Selection Committee.
This finding will be music to the ears of officials in Peking who may have seen their invitation as a trap to force the democrats to assume the unfamiliar role of rejecting dialogue and being unwilling to compromise.
The 400-member Selection Committee is likely to turn out to be little more than a rubber stamp for Peking's candidates. Indeed it is clear that China will only tolerate the appointment of someone it likes as head of the new administration. The front runner is the shipping magnate Tung Chee-hwa who is heavily in debt to Peking for bailing out his company when it was faced with ruin.
Meanwhile Chinese leaders, including President Jiang Zemin, have started to talk about the necessity of the territory being led by people who are "acceptable" to Hong Kongers. This may appear to be a rather unremarkable point of view but it replaces the former emphasis on loyalty to China.
The Chinese government does not wish to see the Democratic Party continuing to secure majority support. A more subtle approach, confronting the democrats with difficult choices, may well yield positive results.