A Thematic Look at 1984
This quote shows repression in their society. It shows how they have brainwashed their children into believing that sex was wrong and bad. They have made there children believe that chastity or refraining from having sex was a essential to remaining loyal to the Party. Through the schools, spies and the Youth League they brought up their kids to believe that sex was wrong and made it so that they would never want to take part in it.
In the part of the quote where it says "but it aroused no desire in him..." it shows that having sex with her wasn't so much what he desired; he didn't really want to have sex with her as much as he wanted to rebel against the Party.
This quote shows how Katherine was brought up and what the party's repression can do to people when they grow up with it. She was probably brought up going to school and the youth league where they instilled in her that sex was bad. And taught her that chastity was party loyalty. A example in this quote that how's her devotion to the party is how she began calling sex "our duty to the party."