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China's 5-Year Plan Will Please: Analyst

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello, I'm Saijal Patel and you're watching "Asia Market Daily".

Billionaire investor Warren Buffett says the U.S. economy is coming back and does not need more stimulus.

In a sit-down interview with CNBC - Buffett says China's quick rise on the international stage isn't necessarily a bad thing for America.

(SOT) Warren Buffett, Chairman & CEO, Berkshire Hathaway:
The United States cannot grow at the same rate as China can, but they start at a far, far lower base, and we ought to be happy that they are doing well. It's not a zero sum game in the world. We do not want to be an island of prosperity among 7 billion people and have 3 and a half billion people doing very well here and the rest of the world in squalor because that's not a good idea under any circumstances.

But Buffett did express concern about the U.S. budget deficit - which equals about 10 percent of GDP - and warned of higher inflation.

(SOT) Warren Buffett, Chairman & CEO, Berkshire Hathaway:
Inflation is the ultimate tax. I mean it taxes people who don't know they're being taxed. We're following policies that will lead to lots of inflation down the road unless changes are made and once inflation is the kind of thing, when it gets started you even, you don't particularly notice it.

The Oracle of Omaha also spoke about the recent fear spreading across markets - amid the Mid-East and North Africa turmoil.

That's caused a spike in gold prices to record highs this week.

But Buffett isn't looking to get into the gold rush.

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(SOT) Warren Buffett, Chairman & CEO, Berkshire Hathaway:
If you took all of the gold in the world, it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet.

67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today's market prices about $7 trillion. That's probably about a third of the value of all the stocks in the United States. So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can't do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.

Now, for $7 trillion, there are roughly a billion of farm - acres of farmland in the United States. They're valued at about $2.5 trillion. It's about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money. And if you offered me the choice of looking at some 67-foot cube of gold and looking at it all day, you know, I mean touching it and fondling it occasionally, you know, and then saying, you know, `Do something for me,' and it says, `I don't do anything. I just stand here and look pretty.' And the alternative to that was to have all the farmland of the country, everything, cotton, corn, soybeans, seven ExxonMobiles. Just think of that. Add $1 trillion of walking around money. I, you know, maybe call me crazy, but I'll take the farmland and the ExxonMobiles.

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Meanwhile, the inner circle of China's parliament - the CPPCC kicks off 2 days of meetings today, before the broader National People's Congress which starts Saturday.

Ahead of that, China's cabinet has announced it will hike the threshold for income tax payments - effectively cutting income taxes for the middle class.

As Cheng Lei reports, it's all part of efforts to spread the wealth - and ensure rising prices don't hurt living standards.

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Making it easier to earn a living and boosting domestic demand, that's what China's policymakers are expected to endorse as part of their next 5 year plan

But facing rising migrant wages, ongoing drought and higher commodity prices, China's immediate challenge is inflation.

While the latest consumer price index data came in lower than expected at almost 5 percent, it still sits above China's threshold. Economists expect monetary policy to remain tight in the first half of 2011.

Wang Jianmao, Professor of Economics, CEIBS:
If you actually raise interest rates too fast which means the financial sector will be under heavy pressure. They have to ride this tightrope.

Rising food costs - a 10 percent gain year over year, according to the National Bureau of Statistics - is also putting dents in the pockets of Chinese consumers. China is hoping to ease pressure by boosting grain output and setting aside 4 billion yuan in funds for water conservation in case of worsening weather.

Another part of the plan - the government is throwing its weight behind the poorer central and western regions by speeding up urbanization there. Some economists say China's traditional bricks and mortar formula is no longer enough to bridge the wealth gap.

Another solution proposed by some economists, is to introduce a capital gains tax or change personal income tax structures.

Li Xunlei, Chief Economist, Guotai Junan Securities:
Personal income taxes only make up 6 percent of the total tax structure in China, versus more than 30 percent in the U.S. In this aspect, we have more room to maneuver. We should increase the minimal taxation levels from 2000 to 2500 yuan.

China is slowly recognizing that the age-old adage of growth at all costs should perhaps not be its mantra. This past weekend, Premier Wen Jiabao said China will now lower its GDP target to 7 percent.

China has to engineer a soft landing. But putting on the brakes will come as a test for China has never failed to surpass its targets in the past 20 years.

And analysts say the measures expected to be announced during the National People's Congress will likely please many.

(SOT) Donald Straszheim, Senior Managing Director, Head of China Research, ISI:
Everybody I think understands also that building China's infrastructure in the inland cities is an important part of the transition that China needs to make. The coastal cities where they built the infrastructure first, are now expensive and crowded. That makes a lot of sense. So we'll see a lot of things I think people will accept and approve of.

And it's not just better infrastructure that will improve people's quality of life. China is also focusing on green initiatives - and becoming more competitive on the global market.

(SOT) Lawrence Chia, Managing Partner, Asia Pacific Region & Co-Chairman of Global Chinese Services Group, Deloitte:
If you look at the new 5-year plan. A lot of money is going to be focused on new sectors, especially relating to new energy, waste protection, bio-tech stuff. All this revolves around new technology. And I think that the Chinese know that they have to move away from the low cost, as a low cost producer, moving up the value chain, and getting much more you know all in line with what we say, try to be more global, more competitive as a company.

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Well as expected, Apple unveiled its latest product overnight: the iPad 2.

But in a move that wasn't so well predicted, Steve Jobs - the man behind the innovation himself - made a surprise stage appearance at the launch.

CNBC's Jon Fortt was there, in San Francisco, where he filed this report.

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Jon Fortt, CNBC:
Apple CEO Steve Jobs himself was on hand to introduce new ipad 2 today. Dramatically new technology here. The A5 processor is dual core. Twice as fast in the CPU, nine times as fast on graphics. It's a third thinner and 10 percent lighter. This comes with new software, for editing movies, for making musical instruments sing. That's iMove and Garage Band. Better yet, it's coming out in the U.S. on March 11, in other geographies on March 25. Apple is rolling this out quickly. Pricing is the same as the previous version. Jobs says he believes this will keep them ahead of the competition that's launching Android devices right and left. We saw Motorola and Samsung releasing devices over the past couple of months. Jobs was in strong form. He looked about the way he has for the last couple of months. He got through the entire presentation without a hitch, his voice was strong. Lots of speculation at the moment about his health, given he took medical leave, announcing he's taking medical leave indefinitely in January. He had been seen at a cancer treatment centre. But again Jobs looked strong here. His voice was strong through the presentation with his usual panache.

For CNBC Asia, I'm Jon Fortt.

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Steve Jobs' appearance did help give a boost to Apple's share price - which has been hammered recently.

Marc Einstein of Frost & Sullivan says the market reaction to Jobs' health has been "a bit much".

(SOT) Marc Einstein, Industry Manager, Frost & Sullivan:
I do think the recent drop in $10 billion from Apple's market cap, allegedly over health concerns is an overreaction. Tim Cook has been around for a long time, and Apple's portfolio for upcoming products like the low cost iPhone and the iPhone 5 which will be out this year in the Summer still make us very bullish on this company.

That brings us to the end of "Asia Market Daily".

I'm Saijal Patel from CNBC.

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