If you’ve created a Custom Post Type, then WordPress should be able to handle this for you automagically. Check the Template Hierarchy.
Instead of creating a “Page” and trying to paginate that, create archive-{post_type}.php instead. That file will be used as the index file for your CPT, and will show up automatically at http://yoursite.com/news.
You’ve made this too complicated, unless there is a lot of information missing from the question.