Belgium winger Carrasco has been on Unai Emery’s radar for months with a January loan deal collapsing.
Arsenal remain interested in the 25-year-old but have struggled to make a breakthrough in talks with his club, who value the player at £30m.
That is too high a price for the Gunners, who are working with a budget of less than £50m and would prefer a season-long loan.
But Carrasco’s future has now been plunged into doubt by an extraordinary row which could play into Arsenal’s hands.
“When we play training matches you just stand around the pitch”
Yu Ziqian, Dalian Yifang goalkeeper
Dalian suspended Carrasco after he missed their game against Hebei Fortune because he had returned late from international duty having missed a connecting flight.
They also made it clear he is no longer welcome at their training ground and have demanded a public apology.
But Carrasco wants out, and the latest developments give Arsenal more leverage in their pursuit of the player.
It comes after the former Atletico Madrid player was slammed by team-mate Yu Ziqian – who accused Carrasco of being lazy and getting booked deliberately to miss game-time.
In a message on social media, the Dalian goalkeeper said: “You don’t even move in training. When we play training matches you just stand around the pitch, you do not attack and do not defend.
“The atmosphere of team training has been ruined. No matter how important a person is, he cannot override the team. I really hope we can say a nice goodbye to you.”
In a statement, Dalian said: “The club does not tolerate someone not following the team rules and overstepping a certain red line.”
It is not the first time Carrasco has run into trouble in China. Last November he had his passport confiscated by the club after a bust-up with a team-mate in training.
Arsenal see Carrasco as a possible alternative to Bournemouth’s Ryan Fraser, but he is also on Bayern Munich’s radar.
Meanwhile, the Gunners have announced they will take on Barcelona in a pre-season friendly at the Nou Camp on August 4.
The two sides will compete for the Joan Gamper Trophy, a match held annually to honour Barca’s founding member, former player and president.