Git does not support partial checkouts, so the submodule must point to a complete repository.
This thread on the Git mail list provides some background information.
This article from Panther Software offers some insight from someone else trying to accomplish a similar goal (i.e. replicate svn:externals using Git).
If both projects are under your control, then I suggest you isolate the “subfolder” that you interested in to its own standalone repo. Then both projects can create submodules that link to it.