Signs of European consumer weakness keep cropping up – from a dismal August UK retail indicator to a grim report by Avenir, a European mobile phone distributor.

The back-to-school outlook for European handset market is grim indeed, and it may be further blighted by consumer anticipation for the likely October launch of the new iPhones.

But what complicates the situation for investors is the remarkable strength of the Chinese handset market. MIIT just announced that the Chinese mobile subscriber base ballooned by 30 Million subscribers over a three-month period, hitting 930 Million at the end of July. More importantly, the 3G subscriber base grew by 20 Million over the same timer period, expanding to 87 Million over the summer.

iPhone’s arrival to China Mobile and China Telecom later this year may accelerate 3G growth, since it is expected to push down the pricing of Android smartphones further. Android growth in China has recently received a boost from cut-rate models from ZTE and sub-$150 smartphone market is expected to bloom over the next winter. Already, Android smartphone market share in China has exploded from 3% to 35% in a single year.

Even as Europe seems to be sliding into a genuine handset market slump, China is still acting as a counterbalance, continuing to beat handset and particularly 3G device volume sales projections made at the beginning of 2011.

This makes component names like Qualcomm and RFMD particularly volatile. European phone slump was priced in during the August share price correction; now investors are weighing the likelihood that Asia might enable handset component names to beat the newly lowered autumn quarter consensus expectations. The sharp recent rebounds of handset component vendors were likely driven by robust Chinese news flow over the past week. However, the investor focus may now well swing back to European consumer trouble as August retail numbers from the continent start trickling out over the next couple of weeks.

It could well be that North America and Latin America will be tie-breakers next winter. If the European telecom slump does not spread to other markets, China’s strength could well offset the EU weakness. But if the US handset market softens notably into Christmas season, all bets are off. There is little doubt that American consumers have proven they are far more tenacious than their melancholic European peers. But the spectacular recent tumble in the US consumer confidence presents a formidable obstacle for the handset market momentum in America.