The former Monaco star, 25, looks set to leave the Chinese Super League this month and was reportedly offered to the Gunners.
Now, reports in Belgium claim Arsenal and Carrasco's representatives held encouraging talks ahead of a move.
Should the ex-Atletico Madrid star opt to join the Premier League side it would be expected he would take a pay-cut on his £170,000-a-week wages, with Unai Emery interested.
Carrasco swapped Spain for China last February, but could be heading back to Europe after less than a year in the Far East.
At the time, the forward – who is also being chased by Manchester United and AC Milan – claimed he moved solely for "professional reasons".
Carrasco said: "The project and offer of the club are a great sign of confidence and respect, and represent an opportunity to develop my qualities and my future.
"Beyond football, which remains my priority, this country also offers me the opportunity to develop personally and also on professional projects that are important to me."
Carrasco – part of Belgium's successful World Cup squad – has scored seven goals and added nine assists in 26 games since joining Dalian Yifan.
Meanwhile, Arsenal are also understood to be close to completing a deal for Barcelona's versatile star Denis Suarez.
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