Gunners boss Unai Emery tried to sign the Belgian winger on a loan deal in January.
But the Chinese Super League side were reluctant to lose their best player before the start of the season.
Denis Suarez arrived from Barcelona instead, but the deal went sour and the winger failed to make a single Premier League start.
Carrasco, 25, is now ready to call time on his spell in the Far East and wants a return to Europe.
And from his latest statement, it seems as though a deal with Arsenal could be edging closer.
Speaking to Spanish newspaper Sport, the Belgian international said: “Negotiations are going well.
“I am aware that I am an important player for the team but I hope they let me leave.
“From a personal and family point of view, I would like to return to Europe.”
The attacker also added that his playing style would suit the Premier League, should he make a switch to England.
“The Premier League is more physical, but there are also a lot of spaces to run into.”
Carrasco has spent a year with Dalian Yifang after two-and-a-half successful seasons with Atletico Madrid.
Emery wants to bring the star to the Emirates to compete with Alex Iwobi and Henrikh Mkhitaryan on the flanks.
Meanwhile, the Arsenal boss was apparently abused by Tottenham fans on a flight to Madrid for the Champions League final.
According to The Times, Emery was allegedly jeered and heckles throughout the journey.
He felt so uncomfortable that he moved away from his wife to spare her the abuse.