Earl Lovelace's novel, The Dragon Can't Dance, depicts a story about oppression and violence. During Carnival, Aldrick's dragon (his costume for Carnival) represents his intimidation and threatening nature. Eventually, when others move in and take over Carnival, Aldrick's dragon is not considered proper by those "in charge." Aldrick is forced to stop dressing as the dragon. Therefore, the dragon can't dance.
The reference to the dragon "can't dance" does not refer to his inability to dance, but that his is not allowed to dance. Aldrick, in his costume, does not actually wish to stop dancing. Instead, he is forced to stop.
Later, Aldrick (pushed too far by the authorities) decides that dressing and dancing as the dragon once a year is not enough for him. Unfortunately, it is too late for him and the ton which takes place within him is all for nothing. It is only here where the dragon "can't" dance (referring to the inability).