TAIPEI — It got walloped in the last two major elections here. Its finances are shaky. And now, it's being targeted by Beijing’s time-honored "divide and conquer" tactics.

Times are tough for Taiwan's pro-independence Democratic Progressive Party.

A decade ago, the young party shocked Asia by riding to power on a wave of nationalist pride. But since mid-decade, its fortunes have reversed. As the governing Kuomintang improves economic ties with China, the DPP has been relegated to the sidelines, with too few seats in the legislature to have political heft.

That may be good news for regional stability. The party is too low on power, cash and morale to rattle Beijing with independence moves.

But the party and its sympathizers say it's unhealthy for...