Can someone living in China on a business visa write a letter of invitation for an S2 visa?

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The S2 is issued to family members of work Z and student X visa holders. The S2 is not issued to family members of business F/M visas. You should apply for a tourist L visa.

To be clear, business F/M visas are issued for people working in China but normally employed by a foreign firm and invited by a Chinese company to conduct business between the foreign and Chinese firm. The work Z visa is issued to people working in China for a Chinese company with an invitation from a government agency.

In any case, I have a Z visa but my brothers and parents visit me on L visas, as do every other foreign persons family I know. A tourist L visa is quite acceptable for short stays.

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